Back To ArticlesHARRISBURG, PA— Late Thursday night, news broke that the federal Department of Health and Human Services, at the urging of President Trump, would terminate a crucial piece of the Affordable Care Act: the law’s cost-sharing subsidies. These subsidies help working and middle-income Pennsylvanians by substantially lowering the amount people pay out-of-pocket and keeping insurance rates down. Antoinette Kraus, Executive Director of the Pennsylvania Health Access Network released the following statement in response:
“The reckless and short-sighted decision by the Administration to end cost-sharing subsidies for 233,663 Pennsylvanians — 55% of all Marketplace enrollees — will leave hardworking people facing higher premiums and a chaotic insurance market. In many states, rates are certain to increase and some insurers may leave the market. In Pennsylvania, however, proactive planning on the part of the state’s Insurance Department means that we anticipate no insurers will leave the market, although rates are likely to increase by a bare minimum of 20%.
Cost-sharing subsidies are not bailouts for insurance companies; they are what allow working families to access affordable health care. In fact, the nonpartisan Congressional Budget Office issued a report that found that ending cost-sharing subsidies would result in one million more Americans without insurance by next year alone. Beyond this, stopping the CSR payments would immediately undercut the individual market’s continued progress towards financial health and stability by forcing insurers to cover the upfront costs of paying CSRs, leading to higher preimums and potentially even their departure from the marketplace.
Congress can still act to stop this. PHAN calls on lawmakers in Congress to intervene and immediately appropriate the funds to make these critically important financial protections permanent.”
BACKGROUND:
- Under the ACA, insurers are entitled to CSR payments, just as eligible people are entitled to the lower cost-sharing charges they provide. Insurers don’t profit from CSRs and the ACA requires insurers to provide them to enrollees even if the federal payments stop. That means that enrollees entitled to CSRs could still access plans with lower deductibles and other cost sharing, so long as a marketplace plan is available. But insurers wouldn’t be compensated for providing CSRs.
- According to CBO and the Kaiser Family Foundation, if the CSR payments stop, marketplace insurers would likely cover the upfront cost of providing CSRs by raising their premiums just for silver plans by about 20% in 2018. Other insurers would likely withdraw from the marketplaces altogether, leaving more consumers in counties with no marketplace plans, CBO finds.
- In Pennsylvania, insurers initially requested a rate increase of 8.8 percent for individual plans and 6.7 percent for small group plans, but the Insurance Department noted that “If changes are made to the individual mandate or the law’s cost-sharing reduction payments, Pennsylvanians would see significant premium increases. Pennsylvania’s five individual market health insurers estimate that if cost-sharing reduction payments were not made, they would need to request a statewide average 20.3 percent rate increase. If the individual mandate is not enforced, they say they would seek a 23.3 percent rate increase. If both changes occur, insurers estimate that they would seek an increase of 36.3 percent, assuming the insurers continue to participate in the market.”
- Stopping CSR payments would raise federal budget deficits by $6 billion in 2018 and $194 billion over the next ten years, relative to current law, due to increased costs for the ACA’s premium tax credits for low- and moderate-income people to offset their rising premiums.
- In 2017, 233,663 Pennsylvanians had their out of pocket costs lowered with additional financial help. This is 55% of all enrollees in the Health Insurance Marketplace.
- In 2016, Pennsylvania received $214 million in cost sharing reductions, or about $949 per enrollee. If the payments are eliminated, these additional costs will eventually be passed on to consumer.
- On average, cost sharing reductions lower deductibles by $2,286 and lower out of pocket maximums by $3,845.
- To qualify, you need to be enrolled in specific Marketplace plans with incomes below the following: Single Individual: $29,700 Household of 2: $40,050 Household of 3: $50,400 Household of 4: $60,750