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A Little-Known Provision in The ACA Could Accelerate Healthcare Reform

A Little-Known Provision in The ACA Could Accelerate Healthcare Reform

Cost-Sharing Reductions (CSRs), a little-known but key feature in the ACA, are the subject of a lawsuit that could create the political motivation necessary to move healthcare reform forward.

The suit, originally brought by House Republicans, challenges the legality of CSR payments to insurers that sell individual policies through state and federal exchanges. These payments are expected to reach $7 billion in 2017. The Obama administration argued that the payments were authorized through the ACA. A lower court ruled against that argument. The Obama administration appealed, but the appeal was put on hold pending results of the presidential election.

The Trump administration, which now takes control of the appeal, finds itself in a predicament: pursue the appeal and support a law it reviles and has vowed to replace or drop the appeal, which could jeopardize the stability of the individual insurance market, leading to millions losing their healthcare coverage.

If the appeal is dropped, costs will increase in two ways for the 12 million individuals covered by policies with CSRs. It’s estimated that carriers will need to raise premiums 10-20% to make up for the lost CSR payments and with no CSRs (which reduce co-pays and co-insurance), out of pocket costs will increase dramatically for subscribers. Higher premiums and policies with no CSRs would price consumers out of the market, certainly those that are healthy. In the midst of this uncertainty about the future of 12 million customers, carriers, who must decide by June what plans to offer in 2018, may conclude that it is too risky to offer plans in the individual market. With no (or only a few) carriers selling through the exchanges, the individual market will be at risk of failing.

An individual market that fails due to the Trump administration dropping its appeal or due to House Republicans winning against an appeal, would put failure of the individual market squarely at the feet of the Republican party. Neither the Trump administration nor House Republicans want to own that failure, which is why CSRs, a little-known but key feature of the ACA, may provide the political motivation necessary to get healthcare reform back on track soon.

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