Last night, the White House issued a statement that the Administration would no longer make payments to insurers for the ACA’s cost-sharing reduction (CSR) program, citing agency guidance that the subsidies were illegal because they were never appropriated by Congress as required by the Constitution.
These CSRs – which are separate from the ACA’s larger advanced premium tax credits (APTC) for households up to 400% of the Federal Poverty Level (FLP) – help offset out-of-pocket expenses for silver-tiered plans purchased through ACA marketplaces like CoveredCA, for households with incomes under 250% of the FPL. CoveredCA prepared for this possibility by having their carriers submit two sets of rates, one of which will embed a surcharge to offset the impact of this move on APTC enrollees.
Several Attorneys General swiftly announced that they would begin the legal process to force the Administration to make the payments through an injunction, which could require the payments to be made while the underlying lawsuit that triggered the legality questions continues. The AGs would need to demonstrate that the nonpayment is directly harming their constituents and is not in the best interests of the defense of the program.
The decision to not make the October CSR payment increases the pressure for Congress to pass a market-stability bill in the coming weeks. Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) have been in negotiations for a bipartisan bill to stabilize the ACA marketplaces for the 2018 plan year that would include temporary funding of the CSR program. There is a general consensus among enough Republicans and Democrats to provide at least temporary funding for the payments.
Our professional association, NAHU, is strongly advocating for the CSRs to be funded in the Alexander-Murray market-stability bill and for Congress to swiftly pass this legislation. We will of course keep monitoring developments and keeping our stakeholders up to date regarding key developments. Please let us know if any questions, comments or concerns.
