Earlier this week, the non-partisan Congressional Budget Office (CBO) released a report on the effects of ending the Cost Sharing Reductions (CSRs), which help make out of pocket costs more affordable for consumers with incomes between 100 and 250 percent of the Federal Poverty Level. In New York, the CSRs also provide funding for the Essential Plan, which covers more than 665,000 New Yorkers. If the CSRs were eliminated beginning in January 2018, the CBO estimates:
- One million Americans would become uninsured in 2018.
- Five percent of Americans would live in counties where there are no insurers are offering Marketplace plans.
- Premiums for the second-lowest-cost silver plans (the plans consumers must purchase in order to be eligible for CSRs) would increase 20 percent in 2018 and increase by 25 percent by 2020.
- The federal deficit would increase by $6 billion in 2018, $21 billion in 2020, and $26 billion in 2026; and
- There would be a net increase of one million more people with coverage by 2020.
However, the CBO report relies on three important assumptions to arrive at these estimates: (1) the decision to end CSR payments would be made in time for insurers to adjust the premiums they will charge consumers in 2018; (2) the Administration will continue paying CSRs each month from now until January 2018; and (3) insurers will absorb the loss of CSR payments by raising only the cost of the second-lowest-cost silver plan. If any of these assumptions are not met, the outcomes for consumers could differ dramatically from the CBO projections. For more details, check out this analysis from Health Affairs.
Recent reports say that the Trump Administration will make CSR payments for the month of August, but this does not provide consumers or insurers, who must finalize their 2018 premiums by early September, certainty for the next plan year. Here in New York State, the Department of Financial Services adjusted health insurance rates for silver plans by an average of 0.6 percent to account for the potential loss of CSRs.