The Trump administration announced late Thursday night it would end monthly subsidies that help low-income people afford out-of-pocket health-care costs, making good on President Donald Trump’s promise to dismantle Obamacare regardless of congressional action.
The move strikes a nationwide blow to individual insurance marketplaces by making it more difficult for some people to pay for premiums and other out-of-pockets costs, which is feared to shrink already small individual insurance markets. The Congressional Budget Office expects premiums to rise without the so-called cost sharing reduction (CSR) payments and Alaska is no different.
Alaska Division of Insurance Director Lori Wing-Heier, who testified before the Senate earlier this summer, said via email today that premiums for people buying insurance through the individual marketplace next year were expected to be lower if the CSR payments had been made. Thankfully those premiums are expected to go down regardless of the action taken on CSR payments thanks to a separate state initiative.
Rates across the board for individual plans offered by Premera Blue Cross Blue Shield (the state’s only provider on the individual marketplace) were expected to go down by an average of 26.5 percent if the cost sharing reduction subsidies had gone into place, she said.
Instead, Alaskans on the individual marketplace are set to see premiums decrease by an average 21 percent next year.
Those decreases are expected whether or not you qualify for a CSR payment or a premium tax credit.
The reduction comes thanks to a state-backed program called reinsurance, which uses federal funding to provide additional insurance to companies insuring high-cost individuals. The program is set to run from 2018 to 2022 and cost $332 million but is expected be neutral on the federal budget because it’ll coincide with lower premium tax credits due to the lower premiums.
Alaska can breath a relative sigh of relief with the news thanks to the reinsurance program, but the rest of the country will likely be in for greater uncertainty in 2018.
According to a report on ending the CSR payments by the Congressional Budget Office, premiums will rise on silver plans by 20 percent in 2018 and be 25 percent higher by 2020, which is expected to grow the deficit because of the higher need for premium tax credits. In fact, without the payments the federal deficit would be expected to grow by $6 billion in 2018 and $21 billion in 2020.
The Senate has discussed the idea of enshrining the cost sharing reduction payments in law during its short-lived effort to find bipartisan agreement for short-term fixes to Obamacare. That effort, which also discussed the possibility of mirroring Alaska’s reinsurance program, was scrapped in favor of the last-minute, last-ditch effort to repeal Obamacare through the unpopular Graham-Cassidy proposal.