Late Thursday, President Trump announced the Administration will no longer pay subsidies to health insurance companies that help pay out-of-pocket costs of low-income people. These plans were disclosed hours after the President issued an executive action yesterday to change the nation’s insurance system, including sales of cheaper policies with fewer benefits and fewer protections for consumers.
The Department of Health and Human Services said it will immediately end these monthly payments, a move that could push premiums as much as 15 to 20 percent higher and prompt more insurers to withdraw from the marketplaces altogether. It would cut approximately $7 billion in annual payments, which reimburse insurers for discounting deductibles and co-payments for the lowest-income enrollees, is grounds for insurers to back out of their federal contracts to even sell plans next year. Already, the Administration had been making the payments on a month-to-month basis, prompting complaints by insurers about a lack of certainty as they tried to plan ahead for 2018 and beyond.
The marketplaces are set to open for 2018 enrollment in two-and-a-half weeks and insurers are finalizing their offerings for 2018 now.
The Administration’s ability to actually make these payments, known as cost-sharing reductions (CSRs) was has already been in question due to a lawsuit filed by House Republicans filed back in 2014 against the Obama Administration.
In the suit, Republicans charged the Administration does not have the authority to make the CSR payments because Congress needed to appropriate the funding, and late last year, a federal judge sided with House Republicans. The ruling stated that the CSRs funding needs to be disbursed by Congress. Technically, this means that the Trump administration would have had to challenge that ruling in order to keep making the payments indefinitely.
Which is what Senators Lamar Alexander (R-TN.) and Patty Murray (D-WA) had been in talks to do for two months. They have been trying to work out a deal to appropriating the funding for 2018 and possibly 2019 to ensure stabilization in the marketplaces, but negotiations have been hampered over disagreements about how much state flexibility to inject into such a bargain. Conservative Republicans have been unwilling to pay CSRs without rolling back ACA regulations, and Democrats will not rollback any of the law’s consumer protections.