Unable to get health care legislation through Congress, the Trump Administration is trying to sabotage Americans’ health care coverage and livelihoods through executive actions. On October 12 Trump announced plans to increase access to skimpy health care plans that don’t meet minimum standards for coverage. Then today the administration announced that it would cut payments to health insurers that are critical to ensuring low-income people can afford health coverage.
It’s important for low-income Americans in the Health Insurance Marketplace to know that they will still get these subsidies, known as “cost-sharing reductions,” to lower their deductibles and copays. These subsidies are guaranteed in law and not changing. People with 2017 policies should keep paying their premiums and everyone who needs health insurance for 2018 should shop in the Marketplace starting on November 1.
It is insurers that will get hit first by the end of the cost-sharing reductions. The insurers will stop getting paid, even if many Americans still qualify for the subsidies.
Once again the administration has created a dangerous climate of uncertainty. This decision creates complexity for insurers, who have already responded by raising premiums and could decide to exit the market for 2018 or in later years. These actions, in turn, harm everyone who relies on individual market insurance – people who buy coverage directly
People likely to be most harmed by ending the cost-sharing reduction payments are those who buy individual market coverage at full-cost – those who earn more than about $48,000/year for an individual or $98,000 for a family of four. About 1.7 million Texans rely on the individual market for coverage because they don’t get insurance through work, Medicaid or Medicare. About half pay full cost and half get ACA subsidies to lower their premiums (the premium subsidy is different than the cost-sharing reduction and is available at higher incomes than CSRs). People who get premium subsidies will largely be shielded from rate hikes insurers have or will pursue to make up for the loss of cost-sharing reduction payments. But it looks like people who pay full cost will be hammered by steep and avoidable increases. Just since this summer, at least two Texas insurers have doubled their proposed premium increases for 2018 in reaction to increasing uncertainty sown by Trump administration actions.
Once again the administration has created a dangerous climate of uncertainty. This decision creates complexity for insurers, who may respond by raising premiums or exiting the market for 2018. That, in turn, harms everyone who relies on individual market insurance – people who buy coverage directly because they don’t get it through work, Medicaid or Medicare.
Cost-sharing reductions help people every day who struggle to make ends meet across Texas and the nation. In Texas, 605,000 people (63 percent of people with Marketplace coverage) have lower deductibles and other out-of-pocket costs because of cost-sharing reductions. Cost sharing reductions are fundamental to making coverage affordable and meaningful to lower-income people. Without these subsidies, an individual earning just over the poverty line, about $12,000 a year, would have a silver plan with a $3,600 deductible – nearly a third of their annual income. In other words, without cost-sharing reductions, people with modest incomes would have an insurance card that they couldn’t afford to use.
People rely on stable health insurance coverage for financial protection and health care access. The series of recent policy changes – slashing Marketplace ads, cutting Navigator funding, expanding unregulated plans in yesterday’s executive action, and now cutting of cost-sharing reduction funding—sends a clear message that this administration does not support the insurance market that 1.7 million Texans rely on for coverage. These policy changes show an utter disregard for the health and financial stability of millions of Americans, and they are unconscionable.