Trump, HHS declare end to cost-sharing reduction payments

Donald Trump speaks at healthcare lunch
The Trump administration announced it will "immediately" discontinue cost-sharing reduction payments. (C-SPAN)

In a move that will cause chaos in an already unstable individual insurance marketplace, the Trump administration announced it will "immediately" discontinue cost-sharing reduction (CSR) payments. Vilified as insurance company bailouts by some on the right, the subsidies help low-income Americans pay for health insurance policies under the Affordable Care Act. 

Insurers have said that without CSR payments, they will have to raise premiums for some marketplace plans, and some have said it will push them out of the individual market altogether. 

“Sadly, instead of working to lower health costs for Americans, it seems President Trump will singlehandedly hike Americans’ health premiums," House Democratic Leader Nancy Pelosi and Senate Democratic Leader Chuck Schumer said in a statement. "It is a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America."

But HHS said the move stands on firm legal ground.

“It has been clear for many years that Obamacare is bad policy," U.S. Health and Human Services Acting Secretary Eric Hargan and Centers for Medicare & Medicaid Services Administrator Seema Verma said in a joint statement announcing the immediate end to the payments. "It is also bad law. The Obama Administration unfortunately went ahead and made CSR payments to insurance companies after requesting—but never ultimately receiving—an appropriation from Congress as required by law."

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The subsidies—estimated at $7 billion this year—have been at the center of a lawsuit in which House Republicans claimed Congress never appropriated the money to fund them. After a legal review by various agencies and an opinion from Attorney General Jeff Sessions, HHS says it concluded the Obama administration overstepped the legal boundaries: "Congress has not appropriated money for CSRs, and we will discontinue these payments immediately.”

In a tweet this morning, President Donald Trump hinted that there's room for negotiation, however, saying Democrats could "call" him about a fix. At the same time, he vowed to dismantle the ACA "piece by piece." 

In fact, the Senate Health, Education, Labor and Pensions (HELP) committee has been pursuing a bipartisan effort to stabilize the individual marketplace. During a series of hearings, witnesses from healthcare industry organizations, including Kaiser Permanente and Anthem, Inc., said funding CSR payments for at least a year, if not longer, was one of the keys.

Although Democrat and Republican Committee members didn’t agree on all of the finer details, by the end of the hearings a consensus had emerged that extending CSR payments should be part of any negotiation.

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Those talks fell apart, however, as Republicans resurrected efforts to repeal the ACA outright. Although the Senate fell short of the votes to repeal, the HELP talks lost momentum in the meantime.  

Yesterday, Trump signed an executive order that directs federal agencies to expand access to association health plans, potentially allowing employers to purchase insurance across state lines and expand coverage through short-term health insurance plans, which are not subject to the ACA regulations, such as minimum coverage requirements.

Though there aren’t many details yet on what policies will result from Trump’s executive order, healthcare policy experts have warned that some of the ideas it contains could have serious consequences.