USA governors urge Trump to continue making health insurance payments

Henrietta Strickland
August 3, 2017

Frustrated by the failure of the Republican-controlled Congress to pass any bill repealing any part of the Affordable Care Act, President Donald Trump has threatened to take things into his own hands.

The Trump administration has spent months flirting with halting cost-sharing reduction payments, the $8 billion fund that reduces copays and deductibles for low-income Obamacare enrollees. The National Association of Insurance Commissioners said on July 28 that Congress should fund the payments, and called for additional funding for insurers to help them bear the cost of sick customers to help stabilize the market. The Trump administration has been doling out the payments on a month-to-month basis and threatening to end them altogether, which is spooking insurers into raising rates.

And more insurers might decide to leave already shaky markets.

The Kaiser Family Foundation estimated "the increased cost to the federal government of higher premium tax credits would be 23 percent more than the savings from eliminating cost-sharing reduction payments".

And the Kaiser Foundation estimates the federal government could actually lose money on that move. "The ruling could make it more hard for the White House to carry out recent threats by President Trump to cut off the payments, giving legal standing to a new set of the payments' defenders". Not so for middle-class families who don't receive subsidies; cutting CSR payments will just raise their premiums.

Seeking to bring down Obamacare, the House filed suit against then-Health Secretary Sylvia Burwell in 2014, arguing that the payments were illegal because Congress never appropriated the money.

While the precise impact of Trump's proposal to end these reimbursements is unknown, experts have said ending the payments could drive up the cost of insurance while reducing the number of options for consumers.

"They are no more a bailout than payments made by the government to a private company for building a bomber", he said. And that will lead the Treasury to spend more on subsidies to policyholders who qualify, according to an analysis by the consulting firm Oliver Wyman.

The Obamacare exchanges require insurance policies to conform to one of four "metal" levels - bronze, silver, gold or platinum - which coincide with how much an individual is expected to pay in premiums, deductibles and other out-of-pocket expenses. A year ago about 85 percent of people who bought Obamacare insurance got a credit, according to the Center for Medicare and Medicaid Services.

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The law also specifies that the government shall reimburse insurers for the cost-sharing assistance that they provide. Under former Speaker of the House John Boehner, the House sued the Obama administration for spending money on the subsidies that Congress had not allocated, alleging a violation of Article I, Section 9, Clause 7 of the Constitution: "No Money shall be drawn from the Treasury, but in effect of Appropriations made by Law".

In Arizona, the largest health insurance plan says it will raise premiums 7 percent if the CSRs aren't paid - but 0 percent if they are. Most of the insurance executives I've spoken to in the past few weeks are planning to assume the CSR payments are not coming unless they see some big change on behalf of the White House.

A federal judge agreed, but the Obama administration appealed. If Trump decides to continue the appeal - and the subsidies - it might not matter: the D.C. Circuit could uphold the lower court ruling that the subsidies are unconstitutional, and they will end anyway.

Obamacare's cost-sharing subsidies are once again at the center of the battle for Obamacare's future.

Other reports by Click Lancashire

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