Obamacare subsidies are on the hot seat in Congress as some House Republicans are in opposition with the way Obama administration funded those subsidies.
Even as health insurers are pushing the Trump administration to keep in place billions in cost-sharing reductions for low-income people buying coverage under the federal health care law, they’re finding themselves holding the bag as uncertainty clouds the future of the industry in the near term.
Most of the uncertainty surrounds the status of subsidies known as cost-sharing reductions (CSRs) which allow companies to cover some seven million individuals by lowering their deductibles and co-payments. New Medicare administrator Seema Verma, said her group drove home that their “most pressing concern is the instability in the individual market created by the uncertainty of funding.”
Many insurers are skittish as deadlines loom which call for setting next year’s rates. Some have even left the federal marketplace altogether. The subsidies are a hot-button issue in Congress as some House Republicans are in opposition with the way Obama administration funded those subsidies. When the previous administration won a court case – now on appeal – which supported the framework behind the payments, more bad blood was the result.
While White House spokespeople say Trump had yet to make a final decision about withholding the subsidies from insurance companies next year, one official said the president was “leaning toward ending the subsidies.” During an interview last week with The Wall Street Journal, Trump threatened to withhold the CSR payments in an attempt to force Democrats to negotiate with his administration regarding the future of the law.
Marilyn Tavenner, the CEO of America’s Health Insurance Plans, said that a discontinuation of the CSR subsidies would have harmful effects on the entire system.
“Without funding, millions of Americans who buy their own plan will be harmed,” Tavenner said. “Many plans will likely drop out of the market. Premiums will go up sharply — nearly 20 percent — across the market.”
Another point of contention surrounds the administration’s hints that it may not choose to impose the tax penalties people now face under the ACA should they refuse to sign up for coverage. If the Trump administration decides not to enforce that mandate, a segment of the healthier population might forego insurance entirely and that would result in an overall more costly pool of sicker patients.
According to the Internal Revenue Service, the current mandate is still in effect but no one seems sure if fees have been collected.
This year, Humana announced it would stop selling policies in 2018, and Iowa’s Blue Cross plan and Aetna announced they would leave the state marketplace next year.
Some insurers are less worried about the state of the marketplace, and many of them remaining in the market say their plans have turned the corner.
Standard & Poor’s released a report earlier this month which directly contradicts the Trump administration contention that the federal ACA marketplace is “in a death spiral.”