Following the demise of the Graham-Cassidy bill in late September, President Trump has unsuccessfully attempted to force a begrudging Congress to reintroduce Obamacare repeal legislation. The animosity between Congressional Republican leadership and the administration has resulted in more than the exchange of Twitter threats. In an effort to force some real change, President Trump has resorted to the issuance of an executive order to eliminate the cost sharing reduction subsidies (CSRs) provision of the Affordable Care Act.
What are CSR payments?
Cost sharing reduction payments cover the cost of copays and deductibles for those who earn between 100 to 250 percent of the federal poverty level, or about $30,000 per person, and do not have health care through their employer. CSRs are subsidies given to insurance companies to lower the overall cost of healthcare for people who earn too little to afford healthcare at sticker-price but too much to qualify for Medicaid. CSR payments can reduce payments from several thousands to a few hundred dollars. Out of the 12 million Americans who purchased health care through the ObamaCare marketplace, 7 million qualified for CSR payments.
What exactly did Trump do?
President Trump’s decision to stop providing insurers with CSR subsidies did not come out of left field. Back in July, he said that he would do so if Congress failed to repeal the ACA.
The executive order he signed is essentially just a formal restatement of this promise, as insurers are still required to provide consumers with CSR payments under Obamacare, meaning that until Congress repeals the ACA, consumers should not experience an increase in cost.
The (potential) impact
If CSR subsidies were to be stopped, millions of Americans could see their premiums skyrocket by 20% as insurers would pass on the increased cost to consumers. Insurers would likely leave the marketplace in a scenario similar to that of Kentucky’s 1994 experiment with the elimination of CSRs–– which led to the exodus of all but two insurers outside of the association market by 1996.
Am I affected?
The changes set forth by the President Trump's executive orders only impact certain individuals who are purchasing health insurance through the federal marketplace. You will likely be affected if:
1. You do not have healthcare through your employer
2. You make between 100-250 percent of the federal poverty line
3. You have a “silver” plan
(this is the most common type of plan purchase through the federal marketplace)
If President Trump’s executive orders stay intact and are implemented completely, it could benefit young adults by making association plans less expensive as the sicker and older workers are pushed into the marketplace. Given the fact that young adults ages 18-30 constitute 35.3 percent of the total CSR-eligible adult population (making them the largest portion of recipients), any alteration to the status quo will inevitably affect the current and future healthcare decisions of college students. In 2015, 17 percent of recent college graduates reported having health insurance through their own employer, meaning that roughly 4/5ths of that age demographic is either insured through their parents' plans, insured via association (the type that CSR payments impact) or uninsured.
Support for the termination of CSR subsidies has largely been split along partisan lines, with Democrats vehemently opposing the measure and Republicans praising it as a necessary step forward towards repealing Obamacare. A handful of moderate Republicans including Sen. Susan Collins (R-ME) and Sen. Lamar Alexander (R-TN) have urged President Trump to reconsider his decision, citing the detrimental impact the elimination of CSR payments would have on the American public.
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