Cost-sharing reduction (CSR) payments is one policy topic under intense political discussion. Part of the Affordable Care Act (ACA), the goal is for CSRs (subsidies paid by the federal government to insurers that lower the amount qualified consumers pay for deductibles, copayments, and coinsurance on the individual marketplaces) to help insurers cover low- and medium-income people.
President Trump approved the September CSR payment to insurers, but he has discussed withholding the monthly payments as a way to better motivate Congress to repeal the ACA.
Here’s more on CSR payments, and brief synopses of five other policy topics you need to understand.
1. CSR payments
“CSR subsidies reduce patient cost sharing by lowering deductibles, copayments, and out-of-pocket limits in the individual exchange market, providing enhanced financial protection for low- and middle-income families with earnings of 100 to 250% of the federal poverty level ($29,425 per individual and $60,625 per family of four in 2015),” says Phillip Haas, clinical assistant professor, health services, School of Public Health, University of Washington. “Qualifying individuals must enroll in a silver plan to receive CSRs and benefit from lower maximum out-of-pocket limits, copayments, coinsurance, and deductibles that increase the actuarial value of their silver plans beyond the standard 70% without increasing their premiums. To compensate insurers for the additional cost of CSRs, the federal government is paying them $7 billion in 2017, rising to projected levels of $10 billion in 2018 and $16 billion by 2027.”
The U.S. House of Representatives has challenged the legality of CSR payments without an explicit appropriation, says Haas. A district court judge ruled in favor of the House but the ruling has been appealed by HHS, and the payments continue, pending the appeal. If a court order or a unilateral decision by the Trump administration ends CSR payments, the insurers would face significant revenue shortfalls this year and next, which would increase the likelihood of insurers exiting the exchange market, he says. Those insurers remaining in the exchanges would need to increase their silver plan premiums to offset the loss of CSRs by an estimated 19%, according to the Kaiser Family Foundation.
The continuing uncertainty regarding CSRs is resulting in insurers exiting the exchanges and decreasing the stability of the overall individual market, says Haas.