POTUS Trump Looks to Halt CSR Payments10.18.17
On October 12, President Donald Trump announced that the federal government will halt payments known as cost share reduction (CSR) payments. The CSR payments amounted to approximately $7 billion this year, and served as a subsidy to enable lower-income Americans to afford health insurance coverage. While the statement from the White House did not establish a specific timetable for terminating these payments, a press release issued the same day by the Department of Health and Human Services announced that “CSR payments to issuers must stop, effective immediately.” President Trump’s decision to terminate these payments was based in large part on a memo from Attorney General Jeff Sessions and the Department of Justice which called into question the legality of the CSR payments. In the memo, Attorney General Sessions concluded that section 1324 of the Affordable Care Act “does not appropriate funds for the Affordable Care Act’s Cost-Sharing Reduction Program.”
Halting these payments could potentially result in premium increases for millions of Americans. Over the past several months, many insurance companies have proposed premium rate increases to state insurance commissioners. Some insurance companies planned for a contingency in which CSR payments were terminated. For example, in Georgia, four health insurance companies proposed two sets of rate increases – one with CSR payments and one without CSR payments. The average percentage increase in premiums with CSR payments was approximately 32%, while the average increase without CSR payments was around 54%. While some insurance companies, like those in Georgia, planned for the termination of these payments, others did not, which could lead those companies to exit the health insurance market, at least for 2018. On October 13, attorneys general in 19 states filed a lawsuit arguing that the federal government is required to make the CSR payments and that failure to do so would be “contrary to the law” and “arbitrary and capricious” under the Administrative Procedure Act.
On October 17, Senator Lamar Alexander (R-TN) and Senator Patty Murray (D-WA) announced a proposal to formally appropriate the CSR payments, rectifying the defect raised by Attorney General Sessions and echoed by President Trump. The senators’ proposal funds CSR payments through 2019 and allocates $106 million towards promoting enrollment in Affordable Care Act plans. Furthermore, the proposal would give the states greater flexibility in obtaining 1332 waivers, which, according to Senator Alexander, will allow “more flexibility in the variety of choices [states] can give to consumers.” President Trump indicated support for the proposal, calling it a “short term solution,” while still emphasizing that his long-term goal is to provide block grants to the states. The senators plan to introduce formal legislation in Congress later this week. Waller will closely monitor this legislation and all further developments arising from President Trump’s decision to end CSR payments.