ADEA Washington Update

President’s Action on ACA Subsidies Breathes New Life Into Bipartisan Plan

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On Oct. 12, President Trump announced he would eliminate health insurance “cost-sharing reduction” subsidies (CSRs) to insurance companies. 

Trump’s decision to end the payments to insurers is viewed as a major blow to the Affordable Care Act (ACA), as it would likely raise health exchange premiums substantially in many states. CSRs were established under the ACA to reimburse insurers for offering lower deductibles and copayments for some consumers who buy health plans on the insurance exchange. The payments are one of two types of ACA subsidies that lower the cost of health care for millions of Americans; the other type helps consumers pay for insurance premiums. Around 12 million people received health insurance through the ACA in 2017, and some 7 million of them had incomes that qualified them for a CSR subsidy.

In a 2014 lawsuit, House Republicans challenged the subsidies, arguing that the payments were illegal under the Constitution because the power of the purse belongs to Congress, and the money to pay for the subsidies has never been appropriated.

After the Administration announced it would stop making the cost-sharing payments, California and 17 other states sued the Administration, arguing that its decision to end the payments was unlawful. It may take months before a final decision is rendered.

However, less than a week after President Trump decided to end the subsidies, Senators Lamar Alexander (R-TN) and Patty Murray (D-WA) chairman and ranking minority member respectively of the Senate Committee on Health, Education, Labor, and Pensions (HELP) said they had reached a preliminary framework on a bill that would restore CSR subsidies for two years and give states more flexibility to bypass the ACA rules on how insurance policies must be structured. The Congressional Budget Office (CBO) found that the Bipartisan Health Care Stabilization Act of 2017 would shrink the federal deficit by $3.8 billion over 10 years without substantially changing the number of people with health insurance coverage..

In addition, Sen. Orrin Hatch (R-UT) chairman of the Senate Finance Committee and Rep. Kevin Brady (R-TX) chairman of the House Ways and Means Committee have proposed an alternative CSR 2 year extension bill coupled with certain ACA reforms.  The Hatch-Brady bill would include pro-life protections; relief from the individual mandate from 2017-2021; relief from the employer mandate from 2015-2017; and increase the maximum contribution limit to Health Savings Accounts (HSA).

Neither measure has been schedule for floor consideration in either House.

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