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Trump Administration Halts ObamaCare CSR Payments Permanently

Posted By Administration, Wednesday, July 11, 2018

Expect lawsuits. Lots of them. They’ll come from all quarters. Attorneys general, consumer groups and — no doubt — health insurance companies will sue.

Here’s why. Last Saturday afternoon the Centers for Medicare and Medicaid Services (CMS) said it no longer going to support the Affordable Care Act’s cost sharing reduction (CSR) program. The CMS statement said the administration will no longer collect the fees involved nor make payouts to health insurers.

The payment it is not going to make now is $10.4 billion due in the fall to cover expenses for insurers last year. 

If you’re not familiar, the CSR is a risk-pooling fund established to keep insurers in ObamaCare. Dropping it means many insurers will likely raise rates for the policies it sells in the ObamaCare exchanges or leave them altogether.

The administration — via CMS administrator Seema Verma — said the withdrawl is tied to a couple of legal disputes over the fairness of how the risk-pool works. A small insurance co-op said the ACA’s distribution favored larger, better-established insurers and left the smaller co-ops to flounder. A court in Massachusetts said it is fair, one in New Mexico said no it is not.

Verma said, “As a result of this litigation, billions of dollars in risk adjustment payments and collections are now on hold.”

On hold or not, those payments are part of the law. Six million people get those subsidies and more than 10 million people are enrolled — still — in ObamaCare exchanges. Insurers — whether the administration makes the CSR payments or not — are required by law to cover these people with discount insurance rates.

Scott Serota of Blue Cross Blue Shield said the Trump administration cannot ignore the law and must not ignore the law. “Risk adjustment is a mandatory program under federal law. Without a quick resolution... this action will significantly increase 2019 premiums for millions of individuals and small business owners... It will undermine Americans’ access to affordable coverage, particularly for those who need medical care the most,” he noted.

Matt Eyles — the president of America’s Health Insurance Plans (AHIP) — said this is going to be disruptive to health care in the U.S. since this is the time of year insurers start the process of setting insurance rates for the coming year. 

“This decision... will create more market uncertainty and increase premiums for many health plans,” Eyles said.

Then Serota and Eyles had their organizations issue a rare joint statement. It said, “These benefits help real people every day, and if they are ended, there will be real consequences. This action will make it harder for patients to access the care they need. Costs will go up and choices will be restricted.”

The attitude of the Trump administration has already impacted insurance rates for this year. Many carriers — assuming the funding would be eliminated — hiked their premiums dramatically for 2018.

Those getting the subsidies will not get hit that hard — if at all — but middle-class individuals and families are going to get clobbered with much higher rates. Plus, the count-on-them-coming rate hikes are picked up by the taxpayers and not those individuals and families that are subsidized. 

And critics note the federal government will spend about $7.2 billion more next year to cover those subsidies because of this decision.

In addition to insurers, politicians are reacting. Senate Minority Leader Sen. Chuck Schumer issued two tweets:

  Sadly, instead of working to lower health costs for Americans, it seems @POTUS will singlehandedly hike Americans' health premiums.

  @POTUS Make no mistake about it, @POTUS will try to blame the Affordable Care Act, but this will fall on his back and he will pay the price for it.


The Protect Our Care Campaign is an ObamaCare protection group. Its leader Brad Woodhouse accused Trump of daily attacking the health care of the American people. “The Trump administration and every Republican in Congress who lets him do this is now responsible for every rate hike people see for the foreseeable future. They broke it, they own it,” he said.

Insurers in some states are already asking for higher premiums for 2018’s plans than they planned. Regulars are saying yes to them. In Oregon, the Oregon Department of Insurance ordered health insurers to boost silver plans by 7.1% this year to make up for the $49 million in cost sharing they are not going to get.

Jean Straight — is the acting director of the state Department of Consumer and Business Services — said, “These rate increases are necessary to ensure the stability of the health insurance market.”

In anticipation of such an announcement by the administration, on Wednesday Covered California — the state’s ObamaCare exchange — added a 12.5% surcharge on its many health plans to offset the loss of the CSR.

Back to the opening paragraph of this story and lawsuits. As soon as the decision was announced, California Attorney General Xavier Becerra and New York State Attorney General Eric Schneiderman said they will file suits to stop the administration from halting the subsidies.

BTW, his is the announcement from the White House on the subsidies:

Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare. In light of this analysis, the Government cannot lawfully make the cost-sharing reduction payments. The United States House of Representatives sued the previous administration in Federal court for making these payments without such an appropriation, and the court agreed that the payments were not lawful. The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system. Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people.


Source links: The Washington Post, CNN Money, CNBC

Tags:  Insurance Content  Insurance Industry  Insurance News  Trump Administration Halts ObamaCare CSR Payments   Weekly Industry News 

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