White House’s decision to stop ACA cost-sharing subsidies triggers strong opposition

White House’s decision to stop ACA cost-sharing subsidies triggers strong opposition

The Trump administration’s decision to halt payments to insurers that help millions of lower-income Americans afford coverage under the Affordable Care Act roiled the law’s insurance marketplaces Friday and sparked an immediate legal challenge from nearly 20 state attorneys general.

The administration’s move, which officials formalized through a filing in a federal appeals court, could throw the ACA sign-up season that begins Nov. 1 into disarray. Some insurers and state regulators are scrambling to reconsider rates for next year, and the uncertainty is sure to make an already challenging enrollment period even more so.

Yet it is unclear whether either the litigation or vehement opposition by a broad swath of the health-care industry has any chance of stopping what the president and his top aides portrayed as integral to their broader effort to dismantle the 2010 health law.

“ObamaCare is a broken mess,” Trump tweeted Friday. “Piece by piece we will now begin the process of giving America the great HealthCare it deserves!”

Both supporters and critics of the ACA see the “cost-sharing reduction” payments, which help offset deductibles and other out-of-pocket expenses for roughly 7 million Americans earning up to 250 percent of the federal poverty level, as crucial for individuals buying coverage under the law.

Insurers are obligated to provide these discounts for eligible customers, even if the federal government does not fund the CSRs, as they’re called; ending the payments is grounds for any company to back out of its federal contract to sell health plans for 2018. Their only other option is to raise premium rates.

In recent months, some state regulators directed ACA insurers to add a surcharge to their 2018 rates in case the payments would not be made, but insurers elsewhere may have to absorb the costs.

On Friday morning, the two main health insurance industry trade groups, America’s Health Insurance Plans and the Blue Cross Blue Shield Association, issued a rare joint statement calling the payments “critical” and saying “there will be real consequences” to ending them. Consumers’ insurance choices will shrink, costs will rise and the marketplaces will become unstable, they warned.

The Congressional Budget Office projected in August that eliminating the payments would increase taxpayer costs by $6 billion in 2018 and $21 billion in 2020 because federal tax credits for many Americans covered under the ACA rise when their premiums increase. The CBO also said that “5 percent of people live in areas that would have no insurers” next year if subsidies ended, but the “slightly higher number of uninsured” would be temporary. By 2020, it estimated, the uninsured rate would be “slightly lower” as more Americans took advantage of more generous premium tax credits.

A major fear among insurers is that the White House’s announcement, combined with other efforts to undermine the marketplaces, will scare customers away if they see rising premiums. Many people may not understand when signing up for insurance that although the premiums may have spiked, the amount they actually pay may not be much higher because of those tax credits — which are available to people who make as much as four times the federal poverty level, or up to $97,200 in income for a family of four in 2017.

“I think it’s unfortunate, because I think it can frighten consumers who may feel there isn’t an opportunity for them to have affordable health care,” said Diane Holder, president of the University of Pittsburgh Medical Center Health Plan.