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Trump Cools on ACA Subsidy Deal, May Skip Today’s Payments

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President Donald Trump on Wednesday backed away from support for a bipartisan proposal that could keep the Affordable Care Act cost-sharing reduction alive for two more years.

At press time, his administration also appeared to be moving toward making good on a pledge to end the cost-sharing reduction subsidy payment stream to health insurers today, by withholding payments the insurers were expecting to get Wednesday.

(Related: Trump Praises Deal to Trade Temporary ACA Cash for State Flexibility)

The cost-sharing reduction subsidy helps Affordable Care Act exchange plan users with family income under 250% of the federal poverty level handle health play deductibles, co-payments and coinsurance amounts. The upper income limit for the subsidy, which goes straight to the insurers, not to the enrollees, is now about $30,000 for an individual in most parts of the country, and about $61,500 for a family of four.

Insurers are expecting to get about cost-sharing reduction subsidy payments for a total of about 6 million enrollees this year.

The Subsidy Continuation Proposal

Sen. Lamar Alexander, R-Tenn., chairman of the Senate Health, Education, Labor and Pensions Committee said Tuesday on the Senate floor that he and the highest-ranking Democrat on the committee, Sen. Patty Murray, D-Wash., will be introducing a temporary individual health market stabilization bill later this week.

Under the agreement, Republicans would agree to fund the cost-sharing reduction subsidy program for 2018 and 2019, in exchange for Democrats agreeing to ease the application process for the Affordable Care Act Section 1332 waiver program.  The ACA waiver program lets a state adjust ACA rules to fit local conditions. Republicans, and some Democrats, have argued that the restrictions the ACA and Obama-era regulations impose on states make the waiver program much too difficult and slow to use.


Trump said at a press conference Tuesday that he saw the Alexander-Murray bill as a short-term solution that would give congressional Republicans time to round up votes for a permanent replacement for the Affordable Care Act.

Today, however, Trump said in a tweet that he is supporting Alexander as a human being, not the Alexander-Murray proposal.

“I can never support bailing out ins co’s who have made a fortune w/ O’Care,” Trump tweeted.

The tweet appeared to leave some room for the possibility that negotiators could come up a cost-sharing reduction subsidy fix that would not look to Trump like a bailout for insurance companies.

Today’s Payments

Insurers in the individual major medical market are facing two related but separate cost-sharing reduction subsidy questions: whether the payments will be gone in 2018, and whether the payments will go away this month.

Insurers in many states have already made adjustments for the possibility that the subsidy payments might go away in 2018, and they may still have some ability to ask regulators and public exchange plan managers for permission to change benefits and rates to reflect 2018 subsidy program changes.

Increases in cash payments from the Affordable Care Act advance premium tax credit subsidy could eliminate the effects of cost-sharing reduction subsidy elimination on 2018 out-of-pocket coverage costs for typical exchange plan users in 2018.

The picture for a mid-year subsidy cut is different.

Insurers in most states appear to be locked in to sticking with any rates and benefits provisions they have put in place for 2017, even if a major coverage subsidy vanishes.

Milliman analysts reported earlier this year that cost-sharing reduction subsidy payments accounted for only about 6% of U.S. individual major medical revenue in 2016, but many insurers already lose money on their individual major medical operations, or have profit margins well under 6%. 

Republicans in Congress have gone to court to attack the legal basis for cost-sharing reduction subsidy payments, and health insurers have faced suspense several times this year over whether the subsidy payment stream would continue. It’s still possible that insurers and the administration could work out a deal over the subsidy program payments that were on track to be paid today.

—- Centene, Hospitals Slide on Trump’s Plan to Stop Subsidies on ThinkAdvisor.

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