According to a new report from the Kaiser Family Foundation, eliminating cost sharing reductions (CSRs), or subsidies that lower the out-of-pocket costs for moderate-income consumers, would increase overall costs to federal government instead of saving money.
Nationally, CSRs are worth approximately $7 billion annually and reduce out-of-pocket costs for moderate income consumers by $3,350 to $3,600 per year.
CSRs are especially important for New York because CSRs provide nearly $1 billion annually in funding for the Essential Plan, the State’s Basic Health Program, which covers nearly 700,000 New Yorkers.
Continued funding for CSRs is at risk. In 2016, members of the House of Representatives sued the Administration to block funding for CSRs and argued that the Administration had paid for them without Congressional authority. A district court ruled in favor of the House, and the case is now on appeal. The current Administration now has to decide whether or not to move forward with the appeal. If the appeal is dropped, and Congress does not appropriate the CSR funding, millions of consumers may no longer be able to afford coverage.
Although it would appear that eliminating CSRs would save the federal government money, the Kaiser Family Foundation explains that any savings would be coupled with significant increases in costs for the Advanced Premium Tax Credits (APTCs) that lower monthly premiums. The report estimates that ending CSRs would actually result in a net increase in federal costs of $2.3 billion.