WASHINGTON — President Donald Trump’s move to pull the plug on billions of dollars in subsidies to insurers to lower deductibles and costs for lower-income Americans has breathed new life into a bipartisan effort to shore up the Affordable Care Act’s insurance markets.
The bid, led by Sens. Lamar Alexander, R-Tennessee, and Patty Murray, D-Washington, had foundered amid a last-minute Republican push in September to repeal the ACA, also known as Obamacare. The proposal has found new life — and a dozen Republican co-sponsors in the U.S. Senate — as insurance companies warn of significant premium hikes without the subsidies.
Failure by Congress to authorize the so-called cost-sharing reduction payments, which reimburse insurance companies for cutting low-income patient' out-of-pocket expenses and deductible, would leave insurance providers with a stark choice, said John Maginnis, a spokesman for Blue Cross and Blue Shield of Louisiana.
“Our only choices are to raise rates or walk away from the individual marketplace,” Maginnis said. “Many insurers have walked away from our state. We’ve committed to the individual market for 2018, but unfortunately, we are forced to pass these unfunded costs of CSRs on to individual customers as rate increases to make up the difference.”
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That’s because, even if the federal government doesn’t pay the billions in payments to insurers, the Affordable Care Act still mandates they offer the plans with reduced deductibles and lower out-of-pocket costs to lower-income people. With the government no longer covering the tab, insurers would likely pass on the cost to customers through higher premiums.
Louisianans buying health insurance on the individual market who earn too much to qualify for subsidies would likely end up getting hit hardest by rising premiums triggered by Trump’s end to cost-sharing payments, said Jan Moller, director of the Louisiana Budget Project, which advocates for low- to moderate-income families.
Taxpayers may get left paying more as well. Many of those buying health insurance on the individual marketplaces receive federal subsidies, which rise with the cost of insurance and cap the amount of money individuals pay in premiums.
The nonpartisan Congressional Budget Office forecast that ending cost-sharing reductions would increase the deficit by $194 billion over the next 10 years as premiums rise and more people receive them. The Kaiser Family Foundation, a nonprofit think tank focused on health policy, estimated that tax credits for those on the exchanges would cost an additional $12.3 billion next year without the cost-sharing reductions.
Among those signing onto the Alexander-Murray bill? Louisiana’s Sen. Bill Cassidy, R-Baton Rouge, who was one of the architects of the September repeal-and-replace legislation. Cassidy and Sen. Lindsey Graham of South Carolina, co-authors on Senate Republican’s most recent attempt to repeal the Affordable Care Act, endorsed the plan in a joint statement Thursday, although they had some caveats.
“Without a stabilization package, the market will collapse and advance premium tax credits will spike. This would increase the costs to the American taxpayer," said Cassidy and Graham, who signed on as co-sponsors to the new bill. "However, we recognize this short-term stabilization will not pass unless concerns of the House are addressed.”
Louisiana Gov. John Bel Edwards joined a bipartisan group of 10 governors in a letter to leaders on Capitol Hill urging them to promptly restore the payments.
The governors, who also included Republicans John Kasich of Ohio and Brian Sandoval of Nevada, wrote that Trump’s decision to terminate the payments just before insurance enrollment opens “is sowing confusion among consumers and leaving states scrambling to develop solutions to stabilize their insurance markets.”
“I think it’s fantastic that Bill Cassidy and John Bel Edwards have found an area of health-care policy they agree on,” said Moller, with the Louisiana Budget Project. “Clearly this is an issue that should go beyond partisan politics because it’s going to affect premiums for so many people in Louisiana and across the country. I’m extremely glad that Bill Cassidy is working to preserve coverage rather than take it away.”
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Yet passing the Alexander-Murray bill through Congress could prove challenging.
A number of leading Republicans have characterized the cost-sharing payments as a “bailout” for insurers, including President Trump, who appeared to both endorse and oppose the proposal in a series of comments this week. And a number of staunch critics of the Affordable Care Act, which Republicans for years pledged to repeal, have expressed concerns about voting to shore up a key part of the law.
“We need to end the Obamacare death spiral once and for all, and the Alexander/Murray bill continues the insurance industry bailouts while doing nothing to reform the fatal flaws of Obamacare that are causing premiums to skyrocket,” said U.S. House Majority Whip Steve Scalise, R-Jefferson. “The Senate needs to continue working until they get the votes to pass a bill that repeals Obamacare and replaces it with the kind of reforms we passed in the House that lowers health-care costs and lets families, instead of unelected bureaucrats, choose the plan that works best for them.”
Maginnis, with Blue Cross and Blue Shield of Louisiana, pushed back against the portrayal of the cost-sharing payments as a “bailout” for the industry.
“Insurers do not profit from these funds; this money simply passes through and goes directly to reduce what eligible members pay for their health-care services,” he said.
“Blue Cross has already lost more than $200 million on individual market ACA products in the past three years, so the statement by the president that we have made ‘a fortune on Obamacare’ and (cost-sharing reductions) are insurance company bailouts is simply not true,” he added.
In Louisiana, about 58 percent of people who bought their health insurance on the individual exchanges qualified for the reduced-cost plans, nearly 80,000 of the 143,000 people, according to the Kaiser Family Foundation. That leaves the two insurance providers on the state’s individual exchanges — BCBS and Vantage Health Plans — vulnerable should the payments end. For the 10 percent of individual marketplace customers who don’t receive subsidies, steep premium hikes wouldn’t be offset with subsidies.
The Associated Press contributed to this report.