Are out-of-pocket expenses crippling the health insurance marketplace? The government provides financial assistance for many income groups to help pay for these expenses, but no one knows if that assistance will continue – or for how long.
To help make insurance affordable, the government offers a tax credit based on your household income to help pay for the monthly cost of a health plan premium. In addition to premium assistance, consumers who are enrolled in a Silver health care plan and make between 100 percent and 250 percent of the federal poverty line may be eligible for further assistance in the form of cost sharing reduction (CSR) payments. Despite 58 percent of all marketplace enrollees qualifying for these payments, we are unsure how long they will remain in place. Deliberation over CSR payments is one of many key elements in the Congressional health care reform debate.
CSR payments (often referred to as a subsidy) are a critical aspect to making health care affordable for patients. Many health plans often require patients to pay out-of-pocket for health care costs in the form of deductibles, copayments and coinsurance. A recent study showed that individuals enrolled in the lowest-tier plan offered in the 2017 exchange averaged more than $6,000 in out-of-pocket expenses. Patients living with psoriatic disease and other chronic illnesses, especially those treating with biologics, can encounter extremely high prescription drug costs for these therapies. For individuals with low or fixed incomes, these high costs can be an extreme burden.
Here's a short video explaining CSRs:
CSR payments go directly from the government to insurance companies to cover their losses from lowering patients’ out-of-pocket costs. Without CSR payments, insurers will likely raise premiums to compensate. The Congressional Budget Office (CBO) recently released a report estimating that without CSR payments, premiums would rise 20 percent in 2018 and about 25 percent by 2020.
The CBO and the Kaiser Family Foundation argues that higher premiums will cost the government more than CSR payments, because patients will then receive government assistance to help pay for the higher premiums. Other insurers, as we have recently seen, may choose not to offer insurance plans due to this funding loss. Health insurance plans often cite the uncertainty around CSR payments as their reason for leaving the marketplace and for raising premiums.
If CSR payments are critical, why the debate?
The CBO estimates the cost of CSR payments at $7 billion in fiscal year 2017, rising to $10 billion in 2018 and $16 billion by 2027. Under then President Obama’s Affordable Care Act (ACA), CSR payments were required by the government, rather than allowing Congress to review and approve payments through their yearly appropriations process (where the government sets a budget and approves funding). This required spending angered the U.S. House of Representatives and led them to file a lawsuit against the Secretary of the U.S. Department of Health and Human Services (HHS) claiming the mandatory nature of these payments was illegal.
At the end of May, the Trump administration asked the U.S. Court of Appeals in Washington, D.C., to place a hold on the case while his administration decides whether it will continue CSR payments. Trump funded CSRs for the month of August while Congress continues to debate ways to improve the ACA.
The U.S. Senate Health Education Labor and Pension Committee is holding a series of hearings while considering a bipartisan health reform bill. During one hearing, a group of three Democrat and two Republican governors stressed the importance of Congress funding CSR payments. Health insurers, hospitals and provider groups sent a letter to President Trump and Congress requesting they fund CSRs for at least two years.
As patients, we should also be concerned. As Congress debates this issue, steps need to be taken quickly to ensure that insurers remain in the market with premium rates and out-of-pocket expenses that are affordable for patients.
It is critical that the patient’s voice be heard during this debate. If you are interested in joining our advocacy efforts surrounding access to care please visit our webpage, where you can sign up for our action alerts and view resources on how to contact your representative directly.
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