Close Close

Life Health > Health Insurance > Your Practice

Trump Hints at Killing ACA Cost-Sharing Reduction Subsidy

Your article was successfully shared with the contacts you provided.

President Donald Trump hinted that he may end a key Affordable Care Act subsidy that makes insurance accessible to poorer Americans, a move that may critically destabilize health-insurance exchanges.

The administration has previously floated the idea to halt subsidies that help insurers offset health care costs for low-income Americans, called a cost-sharing reduction subsidy, or CSR subsidy. In a tweet on Saturday, Trump hinted at ending that program.

“If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!” the president said in a tweet on Saturday.

(Related: Groups Ask Why Senate Uses a Small-Group ACA Exchange)

It was unclear if Trump’s message means he also plans to directly target subsidies that are available to health insurance policies for some Congressional staff members. Thousands of members of Congress and staff are enrolled in plans on the District of Columbia insurance exchange.

The White House declined to comment further on Trump’s tweet.

A months-long effort by Senate Republicans to pass health care legislation collapsed early Friday after Republican John McCain of Arizona joined two of his colleagues to block a stripped-down Affordable Care Act change bill. McCain’s “no” vote came after weeks of brinkmanship and after his dramatic return from cancer treatment to cast the 50th vote to start debate on the bill earlier in the week. The “skinny” repeal bill was defeated 49-51, falling just short of the 50 votes needed to advance it. Republicans Susan Collins of Maine and Lisa Murkowski of Alaska also voted against it.

Ending the CSR subsidies, paid monthly to insurers, is one way that Trump could hasten the current Affordable Care Act system’s demise without legislation, by prompting more companies to raise premiums in the individual market or stop offering coverage. The administration last made a payment about a week ago for the previous 30 days, but hasn’t made a long-term commitment.

Responding on Twitter, Andrew Slavitt, acting administrator of the Centers for Medicare and Medicaid Services in the Obama administration, said the impact of cutting off subsidy payments “will be felt by the middle class who will pay more to subsidize low income.”

The next payments are due Aug. 21. On Friday, health care analyst Spencer Perlman at Veda Partners L.L.C. said in a research note that there’s a 30% chance Trump will end CSR payments, which may “immediately destabilize the exchanges, perhaps fatally.”

Premium Spike Feared

America’s Health Insurance Plans, a lobbying group for the industry, has estimated that premiums would rise by about 20% if the CSR payments aren’t made. Many insurers have already dropped out of the Affordable Care Act public exchange system in the face of mounting losses, and blamed the uncertainty over the future of the cost-sharing subsidies and the individual mandate as one of the reasons behind this year’s premium increases.

Moments after the Senate voted down the Republican bill on Friday morning, Majority Leader Mitch McConnell called on Democrats to offer their ideas for moving forward with health care. But he warned: “Bailing out insurance companies, with no thought of any kind of reform, is not something I want to be a part of.”

A survey in April by the nonpartisan Kaiser Family Foundation showed that 61% Americans believe Trump and Republicans are responsible for future problems with the ACA, while 31% said former President Barack Obama and Democrats would be at fault.

“If the President refuses to make the cost sharing reduction payments, every expert agrees that premiums will go up and health care will be more expensive for millions of Americans,” Senate Minority Leader Chuck Schumer said in a statement. “The president ought to stop playing politics with people’s lives and health care.”

—With assistance from Sahil Kapur and Toluse Olorunnipa.

— Check out Anthem: Subsidy Cash Key to Saving Individual Health on ThinkAdvisor.