The CSR decision follows a Congressional Budget Office projection that withholding the payments would increase federal spending but reduce many people’s premiums and add 3 million enrollees to the individual market.


Aug. 17—Insurers are breathing a sigh of relief this week after the Trump administration decided to provide promised cost-sharing reduction (CSR) payments to health plans in the government-run marketplaces.

Due Aug. 20, this month’s payments were in doubt amid President Donald Trump’s repeated vows to withhold them and let the Affordable Care Act (ACA) marketplaces collapse. But the administration decided several days before the due date to provide the payments—which amount to an estimated $8 billion for the year—multiple media outlets reported.

The payments, which the Obama administration had made under administrative authority, were put in doubt after a federal judge ruled they were illegal without a congressional appropriation. The case is under appeal.

The last-minute decision is only the latest such instance with respect to the CSR payments. The pattern is likely to repeat every time a new round comes due, said Joe Antos, a scholar at the American Enterprise Institute

“My theory is that Donald Trump is so interested in publicity that the administration will end up paying the payment every month, they will announce that they will make the payment two days before they make the payments, and they will never say that it is [also] going to happen next month,” Antos said.

The uncertainty means that even if the Trump administration promises to make CSR payments going forward, insurers likely will be skeptical and will continue to price in higher premiums, according to Antos.

”Neither side trusts the other, so they are not having useful conversations; they are trying to figure out how to protect themselves—both sides,” Antos said. “The net result will be some reduction but not the full 10 to 15 percent.”

ACA marketplace premiums for 2018 were expected to increase by a weighted average of 14.4 percent nationwide if the CSR payments were made and the individual mandate was enforced, according to insurer rate filings tracked by ACAsignups.net. Without the payments and mandate enforcement, premiums would increase by a weighted average of 29 percent, according to the filings.

CBO Projections

The CSR decision came days after a decidedly mixed projection by the nonpartisan Congressional Budget Office (CBO). Although a lack of CSR payments would increase federal spending on premium assistance for ACA marketplace enrollees in Silver-level plans by a net $194 billion over the next decade, many enrollees would pay the same or less for premiums due to the additional subsidies. The resulting lower premiums and more generous plans actually would increase the overall number of insured Americans by about 1 million by 2020, according to CBO.

“Outside the marketplaces, where such tax credits could not be used, CBO and [the Joint Committee on Taxation] expect that Silver plans would be offered with gross premiums about the same as those charged under the baseline [a scenario in which CSR payments continue and the individual mandate is enforced] because insurers would design slightly different products for sale there and could therefore price them differently than the plans sold in the marketplaces,” the report noted.

CSR Payment Planning

The Trump administration’s decision for August came amid a growing number of congressional proposals to provide the CSR funding.

Among the latest efforts, Sen. Lamar Alexander (R-Tenn.), chairman of the Health, Education, Labor and Pensions Committee, announced he would start holding hearings the week of Sept. 4.

During his announcement, Alexander asked that Trump commit to make the August and September CSR payments as Congress looks to set a short-term ACA stabilization plan.

Another CSR payment proposal was included with a plan forwarded by the Problem Solvers Caucus, a bipartisan group of 40 House members who offered a compromise that aims to stabilize the individual health insurance market.

That future of that plan is unclear because it includes provisions opposed by both critics and boosters of the ACA. For example, the plan would ease the provision of state waivers that allow coverage requirements to be changed for insurers in their marketplaces. But the American Hospital Association, an ACA supporter, wrote in a July 12 letter that “such changes could render coverage meaningless when consumers need it most—when they are seeking care.”

However, greater regulatory flexibility is key to reducing costs for off-exchange plans, said Ed Haislmaier, a healthcare policy analyst at The Heritage Foundation, because those enrollees are ineligible for any federal subsidies.

“If you’re trying to save the subsidized population by continuing the subsidies, OK, but that does nothing for the unsubsidized population,” Haislmaier said in an interview.

Outreach Needed

A reported decrease in the Trump administration’s spending on marketing and outreach regarding ACA enrollment requirements may have contributed to a decline in enrollments this year both on and off the ACA marketplaces, some experts worry.

“This is a market where people need to be reminded more than most, partly because they have to initiate it themselves and partly because it is expensive,” Antos said. “So, if you don’t have your mother telling you, ‘Eat your peas,’ you probably won’t eat your peas, and that’s what is going on.”

Enrollment could get worse if the Trump administration drops all marketing efforts, Antos said.

Monthly average enrollments in the overall individual-insurance market fell from 17.5 million in 2016 to 16.7 million in 2017, according to ACAsignups.net, which prominently backs the ACA. The website divided blame for the drop between the availability of other insurance options—like Medicaid—and “reasons related to rate hikes/narrow networks and/or other legitimate problems with ACA-compliant policies.” This year’s reduction followed a 600,000 decrease in net enrollments—concentrated in off-exchange plans—from 2015 to 2016, according to Haislmaier’s tracking.

Antos blamed the enrollment declines—both in the ACA marketplaces and off-exchange—on financial challenges posed by increasingly unaffordable plans.

Organizations that previously partnered with the Obama administration to promote individual insurance enrollment—including companies, youth organizations, churches, women’s groups, and civic groups—are worried because they have not been contacted for similar help by the Trump administration, according to published reports.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Thursday, August 17, 2017