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CBO Report: Effects of Terminating Payments for CSRs

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CBO Report

The federal deficit would grow by $194 billion over 10 years if the Trump administration stops reimbursing private insurers for lowering out-of-pocket expenses for individuals under the Affordable Care Act (ACA), according to the Congressional Budget Office (CBO) with their release of the CBO report on the effects of terminating payments.

Meanwhile, the number of uninsured would increase by 1 million in 2018, but beginning in 2020 and through 2026, it would be 1 million less each year than under current law. And the ACA insurance marketplaces, or exchanges, would survive, according to the CBO report, which one expert considers “too optimistic.”

Its findings may seem counter-intuitive, but the CBO said that ending cost-sharing reduction (CSR) payments to insurers would force those that remain in exchanges to charge higher premiums — 20% higher on average in 2018. Most people covered through the exchanges receive premium subsidies in the form of tax credits, and those subsidies would increase in step with the premiums, shielding enrollees from financial hurt, but costing the federal government billions more, according to the CBO, which made its projections together with the Joint Committee on Taxation (JCT).

CBO Report Report Summary

CBO and the Joint Committee on Taxation estimated the effects on the federal budget, health insurance coverage, market stability, and premiums if payments for cost-sharing reductions would end after December 2017.

The Affordable Care Act (ACA) requires insurers to offer plans with reduced deductibles, co-payments, and other means of cost sharing to some of the people who purchase plans through the marketplaces established by that legislation. The size of those reductions depends on those people’s income. In turn, insurers receive federal payments arranged by the Secretary of Health and Human Services to cover the costs they incur because of that requirement.

At the request of the House Democratic Leader and the House Democratic Whip, the CBO and the staff of the JCT have estimated the effects of terminating those payments for CSRs. In particular, the agencies analyzed what would happen under this policy: By the end of this month, it is known that CSR payments will continue through December 2017 but not thereafter.

Overall Effects

As a result of the increase in total subsidies under the policy, CBO and JCT project these outcomes, compared with what would occur if the CSR payments were continued:

  • The fraction of people living in areas with no insurers offering non-group plans would be greater during the next two years and about the same starting in 2020;
  • Gross premiums for silver plans offered through the marketplaces would be 20 percent higher in 2018 and 25 percent higher by 2020—boosting the amount of premium tax credits according to the statutory formula;
  • Most people would pay net premiums (after accounting for premium tax credits) for non-group insurance throughout the next decade that were similar to or less than what they would pay otherwise—although the share of people facing slight increases would be higher during the next two years;
  • Federal deficits would increase by $6 billion in 2018, $21 billion in 2020, and $26 billion in 2026;
  • The number of people uninsured would be slightly higher in 2018 but slightly lower starting in 2020.

Those effects are uncertain and would depend on how the policy was implemented.

 CLICK HERE and let us show how BHM can economically maintain turn-around times even in the most disruptive political environments.

2017-08-17T00:13:48+00:00 By |Managed Care, Medicare and Medicaid|

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