Is Trump Going to End Cost Sharing Reduction Subsidies for the Working Poor?
Trump is reportedly considering ending ObamaCare’s CSR Subsidies for out-of-pocket costs. This would affect customers starting during open enrollment.
It works like this: The changes would take effect after May, but customers wouldn’t see the impact until open enrollment (or special enrollment after May) because the changes would hit insurers first.
To get this, we need to understand a few things:
- Cost Sharing Reduction (CSR) Subsidies help those with incomes between 100% – 250% to afford their out-of-pocket costs.
- CSR subsidies aren’t paid directly to those with coverage, instead insurers get the payments directly, and then the customer gets a plan with lower cost sharing based on income (so the result is subsidization, but the payment goes to the insurer, not the customer directly).
- The insurers are in contract with customers, so they have to offer the lower costs even if the government doesn’t subsidize them.
- The GOP has been blocking payments to insurers here and there since ObamaCare started, it is part of what makes the prices go up (it is part of their “starve the beast strategy,” the idea being if they break ObamaCare people will beg them to fix it; Rubio did this and they did this with Medicaid expansion for example).
Thus, the real problem isn’t what happens now, it is the chaos and higher prices it will create next open enrollment.
Without the assistance, which TrumpCare (the American HealthCare Act) cuts anyways but which the Trump administration is considering cutting early, many won’t be able to afford the cost sharing on the plans they can afford the premiums of.
This means working individuals and families with low incomes would see affordable premiums, but unaffordable cost sharing on next years plans.
These subsidies, unlike others, need to be approved incrementally (due to a conservative backed lawsuit that was part of the ongoing sixth party conservative coalition strategy that created everything from the Heritage Foundation, to Fox News, to Trump’s base, to all the other ObamaCare lawsuits, and is currently creating “the Sinclair broadcast network”).
Thus, these subsidies are a part of the ACA that can be repealed early, before even the first phase of TrumpCare is in place.
Trump has previously expressed conflicting opinions on the issue. Insurers have been pressing for certainty as they plan for next year. The payments, estimated at $7 billion for this year, go to insurance companies to reduce deductibles and other out-of-pocket costs for low-income consumers — an estimated 7 million people in 2017. Insurers are on the hook under the health law to keep paying even if the federal money stops.
In summary: Trump is considering ending subsidies early, which will cause chaos in the ACA markets, but GOP aides are warning the move will backfire in 2018 as people will realize their assistance was cut before the 2018 congressional elections.