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Thursday, 17 August 2017 11:10

Will Cost Sharing Reductions to Insurers Continue?

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In a Twitter message on July 29th, U.S. President Donald Trump threatened to end government payments to health insurers if Congress did not pass a new healthcare bill. Trump tweeted "If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!"

The “BAILOUTS” that President Trump is referring to is the approximately $7 billion in cost-sharing reduction subsidies the federal government pays annually to reimburse insurers who are required under the ACA to reduce deductibles and out-of-pocket maximums for low-income Americans. Because of a pending lawsuit, the payments, which are determined by the Department of Health and Human Services, are currently being doled out on a month-to month basis. 

The second part of President Trump’s tweet appears to be a threat to end the employer contribution for Congress members and their staffs, who were moved from the normal Federal Employee Healthcare Benefits Program onto the Affordable Healthcare Act plans (via the insurance exchanges) as part of the 2010 healthcare law. This would cause Congress and its staff to be the only permanent, salaried Federal employees without benefits.

The nonpartisan Congressional Budget Office estimates that health insurance premiums for many customers under the Affordable Care Act markets would be 20 percent higher in 2018 if Trump stopped the insurer payments, actually raising the deficit since this would cause the federal premium subsidies to skyrocket in cost. Fortunately, for now, it was announced on August 16th that the Trump administration will make cost-sharing payments to insurance companies under Obamacare for August 2017. There has been no mention regarding payments for subsequent months in the year. 

Republicans return from recess in September and insurers are still unsure whether they will again try to repeal or replace the law when they return and whether the Trump administration will permanently make the Cost Sharing Reduction payments. They also do not know whether the administration will enforce the individual mandate requirement of the ACA that all Americans buy health insurance or else pay a fine. All of these are creating uncertainty in the individual health insurance market and driving up premiums.

Most Americans are ready to move on from healthcare at this point. According to a poll released last month, 64 percent of 1,136 people surveyed recently said they wanted to keep the ACA intact, either "entirely as is" or after fixing "problem areas”. When asked what they think Congress should do next, most picked other priorities such as tax reform, foreign relations and infrastructure. Only 29 percent said they wanted Republicans in Congress to "continue working on a new healthcare bill." 

We’ll keep you posted on any bills that actually pass after the summer recess. In the meantime, don’t hesitate to contact us with any questions.
Read 944 times Last modified on Thursday, 31 August 2017 07:32
Juliet Fitzgibbons

Juliet joins Fall River as an Account Executive and brings over 15 years of prior broker and account management experience. Her experience brings extensive knowledge on employee benefit programs, account management and creative cost-saving strategies and compliance solutions for employers of various sizes.

She is responsible for new business proposals, client renewals including plan benchmarking, rate analysis and mid-year reviews. She helps clients navigate healthcare systems and educates employers and employees through open enrollment meetings and day-to-day service requests. Juliet joined Fall River in 2015.