As reported in last month's newsletter, President Trump has threatened to withhold making payments to fund Cost Share Reduction Plans (CSR's) which are available to those making at least 100% of the Federal Poverty Limit (138% in states that have expanded Medicaid) up to 250%. No official announcement has been made as of the date this newsletter is being written, but a White House official said on August 16 that such payments would be made for August and recent press reports have said that such payments will also be made for September. However, there is no commitment to make payments beyond then.
According to the Congressional Budget Office and as reported by the Associated Press on August 16 the following would happen if the President cuts off funds for CSR's:
- Consumers who now qualify for tax credits to offset their monthly premiums would be largely shielded from the estimated 20% jump in the cost of a standard "silver" plan, because ACA subsidies would generally increase to cover such subsidies. But middle-class households that make too much to receive help with their premiums would face a big hit.
- Depending on factors like their income and age, some subsidized customers would be able to take their higher premium tax credits and buy a generous "gold" level plan for about the same money, or a "bronze" plan for much less (or nothing).
- Some insurers would decide to exit the market rather than re-jigger premiums for 2018 at the last minute. That would leave areas of the country that are home to about 16 million people with no insurance on the health care marketplace for individual policies. Rural communities are at greater risk.
- About 1 million people would become uninsured right away, but more people would be covered.
President Trump has threatened to withhold payments as a means to spur Republicans to take some kind of action on repealing/replacing Obamacare, but his action would adversely affect those who come close or relatively close but do not qualify for subsidies, and these people are a significant portion of the President's support base. This situation creates a difficult political situation for the President should he choose to withhold payment.
Cost Sharing Reduction subsidies are authorized in the Affordable Care Act, but Congress has never specifically passed an appropriations bill to pay for these subsidies. As a result, a group of Republicans filed a lawsuit in 2014 claiming that these subsidies were unconstitutional because they were not funded by Congress. A District Court judge agreed and ordered a halt to the payments but suspended the order to allow the government to appeal. The case is pending before the US Court of Appeals for the District of Columbia circuit.
Meanwhile, Senator Lamar Alexander ( Republican-Tennessee), the Chairman of the Senate Health Committee, has said he plans to hold hearings in September with a view to producing bipartisan legislation that would stabilize insurance markets and provide money for the subsidies.
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