CBO to weigh in on cost-shar­ing re­duc­tion pay­ments

Modern Healthcare - - THE WEEK AHEAD - —Mara Lee

A new health­care must-read will hit ev­ery­one’s sum­mer list this week.

That’s when the Con­gres­sional Bud­get Of­fice is set to re­lease a re­port de­tail­ing what could hap­pen to in­surance mar­kets if the fed­eral gov­ern­ment stops mak­ing cost­shar­ing re­duc­tion pay­ments.

The pay­ments, part of the Af­ford­able Care Act, re­im­burse in­sur­ers for lim­it­ing de­ductibles and co­pays to in­di­vid­ual cus­tomers with in­comes of less than $29,700, or 250% of the poverty level. Pre­mi­ums for the plans those cus­tomers buy do not cover the cost of the gen­er­ous ben­e­fits.

The CSRs have long been a po­lit­i­cal hot potato and the fo­cus of Repub­li­can ef­forts to dis­man­tle the ACA. House Repub­li­cans in 2014 sued to get rid of the pay­ments, ar­gu­ing that the leg­isla­tive branch, not the ex­ec­u­tive branch, al­lo­cates fed­eral spend­ing. A fed­eral court agreed. The Obama ad­min­is­tra­tion ap­pealed, but the case is now on hold as the Trump ad­min­is­tra­tion de­cides what to do. Pres­i­dent Don­ald Trump has re­peat­edly threat­ened to end the pay­ments as a tac­tic to get Democrats to the ne­go­ti­at­ing ta­ble.

The ad­min­is­tra­tion has, in the mean­time, been mak­ing the CSR pay­ments on a month-by-month ba­sis, cre­at­ing con­sid­er­able un­cer­tainty for in­sur­ers and state reg­u­la­tors as they try to set 2018 rates. The CMS late last week ex­tended un­til Sept. 5 the dead­line for plans to file their ad­justed rates.

HHS of­fi­cials also told in­sur­ers that while “there have been no changes” to cost-shar­ing re­duc­tion pay­ments, the de­part­ment will change its risk-ad­just­ment method­ol­ogy in states that have asked in­sur­ers to in­crease sil­ver plan rates on the as­sump­tion that the pay­ments stop. Be­cause cus­tomers face far less outof-pocket costs in plans with lim­ited de­ductibles and co­pays, there is likely to be more uti­liza­tion, so it will treat these plans dif­fer­ently in the risk-ad­just­ment for­mula, ac­cord­ing to HHS.

The Kaiser Fam­ily Foun­da­tion this year re­ported that end­ing the pay­ments would end up cost­ing the fed­eral gov­ern­ment more than con­tin­u­ing them. The pro­jec­tion is that in­sur­ers would be owed $10 bil­lion in CSR pay­ments next year. Kaiser an­a­lysts said that pre­mium sup­port to buy plans would in­crease by $12.3 bil­lion as in­sur­ers have to raise rates to ac­count for the lost pay­ments.


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