WASHINGTON – The White House last week authorized the continuation of the Affordable Care Act’s cost-sharing reduction payments through August despite the president’s threats to cut off the Obamacare funds.
The decision came a day after the Congressional Budget Office released a report showing that if President Trump carried out his promise to end payments, premiums would rise 25 percent and the deficit would grow by $194 billion over 10 years. State insurance commissioners also have said that payment cancellation would inspire more insurers to exit Obamacare exchanges.
Cost-sharing reductions are federal subsidies that reduce out-of-pocket healthcare expenses for poverty-level individuals and families, including deductibles, copayments and coinsurance. The federal government reimburses marketplace insurers so that savings can be passed on to customers.
The subsidies came under fire again earlier this summer when two House committees claimed they were unconstitutional, arguing that the Obama administration implemented the payments without proper appropriations authorization. The payments are the subject of a lawsuit that House Republicans originally brought against the previous administration.
House Democratic Whip Steny H. Hoyer (Md.) accused the Trump administration of trying to sabotage the Affordable Care Act, which would “harm millions of Americans who are working hard and don’t deserve to lose access to affordable health coverage.” Hoyer called on Republicans to work with Democrats on “bipartisan, commonsense solutions” to healthcare, while noting the GOP’s failure in passing the party’s own healthcare legislation.
“(The CBO score) isn’t a partisan prediction,” Hoyer said in a statement. “It is the careful analysis of the nonpartisan Congressional Budget Office, which I asked it to produce to show the American people the dangerous impact ending these payments would have.”
Senate Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander (R-Tenn.) applauded Trump’s decision to continue making payments through the month. He argued the move will help 18 million Americans – including songwriters, farmers and self-employed individuals – purchase health insurance.
“Congress now should pass balanced, bipartisan, limited legislation in September that will fund cost-sharing payments for 2018 as well as make section 1332 of the Affordable Care Act work better to give states more flexibility in approving insurance policies,” Alexander said in a statement. “These two actions will help make insurance policies available at affordable prices.”
Nicholas Sarwark, chairman of the Libertarian National Committee, in an interview last week called the cost-sharing subsidies, as well as the Affordable Care Act, a “real mess.” He argued that health insurance companies are blackmailing the federal government for a corporate bailout, while using Obamacare as a shield.
Health insurance companies are essentially saying, “‘Hey, our market doesn’t work. People don’t buy our crappy products, and you force them to buy our crappy products with the law, and then even after forcing them, that’s not enough money, can you just give us some tax money to tie this over, otherwise we’re going to uninsure all these people.’ That is not a system that’s functional, if you ask me,” Sarwark said.
Sarwark argued for clean repeal of both cost-sharing reduction payments and the Affordable Care Act and a return to the free market, which he said will drive down the costs of health insurance. The U.S. health insurance system is broken, he said, because government-regulated marketplaces don’t work, adding that they increase costs and unnecessarily place bureaucrats between citizens and healthcare. The “stupid” healthcare proposal offered by Republicans in the Senate, he said, was a waste of time and suffered from the same inherent problems under Obamacare.
Kaiser Family Foundation senior vice president Larry Levitt said in a tweet on Tuesday that ending CSR payments to insurers “seems like a pretty clear case of cutting off your nose to spite your face.”
The think tank, which focuses on healthcare policy, issued a report on Aug. 10 stating that many insurers will tack on an additional 3 to 10 percent for rate increase requests in 2018 if CSR payments are ended or the uncertainty continues. Many of these insurers are already requesting rate increases between 20 and 40 percent.