President Trump Halts CSR Payments, Signs Executive Order on ACA Components

Thursday, October 12th, 2017
This post was written by Melanie Matthews

The Trump Administration has called for the discontinuation of cost-sharing reductions (CSR) payments to health insurance companies based on a legal opinion from the Attorney General. President Trump also signed three executive orders directing the appropriate federal agencies to examine three Affordable Care Act (ACA) components: association health plans (AHPs), short-term, limited-duration insurance (STLDI), and health reimbursement arrangements (HRAs).

“CSR payments are prohibited unless and until a valid appropriation exists,” said HHS Acting Secretary Eric Hargan, referring to the legal opinion from the Attorney General’s Office regarding CSR payments.

According to August 2017 estimates from the Congressional Budget Office and the Joint Committee on Taxation on the impact of ending CSR payments, the number of people uninsured will be approximately 1 million higher than under the baseline in 2018 but about 1 million lower in each year starting in 2020. In 2018, under the policy, the largest effect on coverage would derive from the drop in the number of insurers participating in the non-group market.

The CBO and JCT also estimated that by 2020, the effect on coverage would stem primarily from the increases in premium tax credits, which would make purchasing non-group insurance more attractive for some people. As a result, a larger number of people would purchase insurance through the marketplaces, and a smaller number of people would purchase employment-based health insurance.

President Trump also signed Executive Orders that direct the:

  • Secretary of Labor to consider expanding access to AHPs;

  • Departments of the Treasury, Labor, and Health and Human Services to consider expanding coverage through low cost STLDI; and

  • Departments of the Treasury, Labor, and Health and Human Services to consider changes to HRAs.

Each of these components will be subject to the federal government’s rulemaking process and will not have an impact on this year’s open enrollment period under ACA.

Industry reaction was mixed to the Executive Orders:

  • “Health plans remain committed to certain principles. We believe that all Americans should have access to affordable coverage and care, including those with pre-existing conditions. We believe that reforms must stabilize the individual market for lower costs, higher consumer satisfaction, and better health outcomes for everyone. And we believe that we cannot jeopardize the stability of other markets that provide coverage for hundreds of millions of Americans. We will follow these principles – competition, choice, patient protections and market stability – as we evaluate the potential impact of this executive order and the rules that will follow. We look forward to engaging in the rulemaking process to help lower premiums and improve access for all Americans,” said Kristine Grow, Senior Vice President, Communications, America’s Health Insurance Plans (AHIP).

  • The American Hospital Association (AHA) said while the “Executive Order will allow health insurance plans that cover fewer benefits and offer fewer consumer protections. No one can predict future health care needs with complete certainty and such plans could put patients at risk when care is needed most.”

    In addition, said the AHA, these provisions could destabilize the individual and small group markets, leaving millions of Americans who need comprehensive coverage to manage chronic and other pre-existing conditions, as well as protection against unforeseen illness and injury, without affordable options. And, regarding consolidation, respected economic studies demonstrate that the hospital field’s trajectory has resulted in both cost savings and quality improvements. The AHA is encouraging the Administration to achieve the goal of ensuring that individuals and small businesses have affordable, comprehensive healthcare coverage options without sacrificing critical consumer protections by stabilizing the individual and small group markets.

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