The Trump administration’s decision to end cost-sharing reduction payments drew strong reactions Friday, including calls for Congress to intervene and pledges to fight the move in court.
America's Health Insurance Plans, which has long urged lawmakers and the administration to pledge to continue the payments, warned that consumers would be harmed by the decision to end them.
“We need constructive solutions that increase consumer choice, lower consumer costs and stabilize local markets," AHIP said in a joint statement with the Blue Cross Blue Shield Association. "Terminating this critical program will do just the opposite. This action will make it harder for patients to access the care they need. Costs will go up and choices will be restricted."
House and Senate Democratic leaders Nancy Pelosi and Chuck Schumer issued a blistering response.
“It is a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America,” they said in a statement.
“Make no mistake about it, [President Donald] Trump will try to blame the Affordable Care Act, but this will fall on his back and he will pay the price for it,” they added.
The conservative group Freedom Partners hailed the decision.
“Circumventing the law to ask taxpayers suffering from Obamacare to continue propping it up is simply indefensible, and President Trump is right to end these illegal payments,” said Nathan Nascimento, the group’s vice president of policy.
The move to end CSRs comes on the heels of an executive order issued by Trump on Thursday, which directs federal agencies to take actions that would have the effect of loosening ACA regulations. Experts warned that they could result in rising costs for sicker enrollees and destabilization of the insurance markets.
In a tweet Friday morning, Trump left little doubt over the intended result of both actions—to unwind the ACA after Congress failed to do so.
ObamaCare is a broken mess. Piece by piece we will now begin the process of giving America the great HealthCare it deserves!— Donald J. Trump (@realDonaldTrump) October 13, 2017
States threaten lawsuits
New York Attorney General Eric Schneiderman said he and a coalition of attorneys general—who successfully secured the right to intervene in the federal court case challenging CSR payments—“stands ready to sue” to defend the subsidies.
California Attorney General Xavier Becerra, who also led the push to intervene in the House v. Price court case, concurred.
Insurers were set to receive $7 billion in CSR payments from the government this year—funds they then mete out to eligible individual market enrollees to help cover their out-of-pocket healthcare costs.
The court case challenging them argued that the payments were illegal, because Congress never appropriated them. A judge sided with the plaintiffs—House Republicans—but the Obama administration appealed. That appeals case has been on hold since Trump took office, and his administration has been paying the subsidies on a month-by-month basis despite frequently threatening to end them.
Now, though, the administration has concluded that those payments have been illegal all along. “Congress has not appropriated money for CSRs, and we will discontinue these payments immediately,” according to a statement from the Department of Health and Human Services.
Many insurers have already priced the possibility of the subsidies ending into their 2018 premiums, and California added a 12.4% surcharge onto silver-level plans to account for uncertainty over the subsidies.
For its part, the Congressional Budget Office previously estimated that if the Trump administration ended CSR payments starting in 2018, premiums would rise 25% by 2020.
It also predicted that ending the subsidies would be more expensive than keeping them, since such a move would result more people receiving premium tax credits and in greater amounts. All told, the CBO projected that ending CSR payments would raise the federal deficit by $194 billion through 2026.
All eyes on Congress
Congress could render the Trump administration’s decision to end the CSR payments moot by passing a bill that expressly appropriates them.
The Senate Health, Education, Labor and Pensions Committee has been conducting bipartisan talks aimed at drafting an ACA stabilization bill that would do just that, but some Republicans recently expressed doubt that anything will come out of the discussions.
Now that the Trump administration has made good on its threat to end the subsidies, the pressure on Congress is certain to increase.
“The time is now, we need congressional action,” said Ceci Connolly, president and CEO of Alliance of Community Health Plans. “We are encouraged that Senate leaders are back at the table. ACHP and its member plans stand ready to work with Congress on a bipartisan solution to protect coverage gains, ensure access to affordable health care and provide certainty to the market.”
If Congress fails to act, the real consequences will be seen in later years, predicted Leerink Partners analyst Ana Gupte.
“Post-2018, if this is not resolved through legislative compromise, it will result in insurer exits” from the exchanges, she said in a research note.