- Will CSR Payments Resume in 2018? ACA cost-sharing reduction (CSR) payments ended in 2017. Expiration of the CSR payments is projected by CBO to destabilize health insurance exchanges, increase premiums, and increase federal deficits by nearly $200 billion. Congress failed to act on the Alexander-Murray Bipartisan Health Care Stabilization Act of 2017 that would resume the payments.
- Background: The Affordable Care Act requires insurers that cover ACA marketplace enrollees to make available (“silver”) plans that reduce cost sharing (deductibles, coinsurance, and copayments) for enrollees with incomes up to 250 percent of the federal poverty level, and requires the federal government to reimburse the insurers for the cost-sharing reductions. Those reimbursements stopped in December.
- Two types of subsidies: Of the more than 10.3 million people who had coverage through the ACA exchanges in 2017, 84 percent were receiving premium subsidies, and 57 percent were receiving cost-sharing reduction subsidies (through “silver” plans).
- Cost-sharing subsidies are automatically incorporated into silver plans when enrollees shop for plans through the exchanges. Although the federal government is no longer reimbursing insurers for the cost of providing cost-sharing reductions, the availability of the benefits themselves has not changed — but CBO projects the end of the subsidies will lead insurers to drop out or increase premiums for others.
- Nov. 8, 2017: CBO reported that repealing the individual mandate would increase premiums in the nongroup market by 10%, increase the number of uninsured by 13 million by 2027, and reduce deficits by $338 billion over 10 years. CBO explained, “Those effects would occur mainly because healthier people would be less likely to obtain insurance and because, especially in the nongroup market, the resulting increases in premiums would cause more people to not purchase insurance. If the individual mandate penalty was eliminated but the mandate itself was not repealed, the results would be very similar….”
- Oct. 27, 2017: KFF reports on how the loss of CSR payments is impacting 2018 health insurance premiums.
- Oct. 13, 2017: Administration confirmed decision by President Trump to terminate ACA cost-sharing reduction (CSR) payments to insurance companies. Background: The Affordable Care Act requires insurers that cover marketplace enrollees to reduce cost sharing for enrollees with incomes not exceeding 250 percent of the federal poverty level; and requires the Department of Health and Human Services to reimburse the insurers for the cost-sharing reductions. On November 21, 2014, the House filed a lawsuit in the U.S. District Court claiming the cost-sharing reduction (CSR) subsidies were in violation of the Constitution because Congress had not appropriated funds for them. The Administration challenged the lawsuit claiming that the House had no legal standing to sue, and asked for the lawsuit to be dismissed. On September 9, 2015, the judge ruled that the House did have standing to pursue the claim that the Administration was violating the Constitution by paying cost-sharing subsidies without an appropriation. On May 12, 2016, the judge issued a decision on the merits, holding that Congress had not appropriated funds for the payment of cost-sharing subsidies. That ruling has been stayed while the case is on appeal to the U.S. Court of Appeals for the D.C. Circuit.” CBO analysis CRS Report KFF Analysis
- Oct. 12, 2017: The Trump administration advanced an executive order directing agencies, including the Department of Labor, to consider proposing rules or new guidance to loosen current restrictions on what are called “association health plans” and on selling low-cost, short-term insurance. Such rules could potentially exempt such plans from a number of the requirements of the Affordable Care Act. Background: The GAO raised concerns about multiple employer welfare arrangements (MEWAs) in a 1992 report. See also CRS Health Insurance – A Primer March 2009 (addressing association health plans); CRS: Association Health Plans_ March 29, 2006 CRS Side-by-Side Description of Small Business Health Insurance Proposals May 2006; and CRS Association Health Plans, Health Marts and the Small Group Market for Health Insurance June 2003. The directive also instructs agencies to consider new regulations or guidance to: (i) permit tax-free employer contributions through health reimbursement accounts that workers could use to buy individual market plans, which critics argue could result in more employers dropping job-based coverage and simply giving workers money to buy their own plans; and (ii) report on steps federal and state governments could take to “increase choice and reduce consolidation” in the health care market.
- Sept. 26, 2017: Lacking 50 GOP votes to pass the latest ACA repeal-and-replace legislation (Graham-Cassidy), Senate Republicans canceled plans to vote on the measure. This was the last week to utilize filibuster-proof FY 2017 “Budget Reconciliation” procedures to advance the legislation without Democratic votes.
- Sept. 25, 2017: CBO releases preliminary analysis of the Graham-Cassidy repeal-and-replace legislation concluding: “Over the 2017–2026 period, CBO and the staff of the Joint Committee on Taxation estimate, the legislation would reduce the on-budget deficit by at least $133 billion, the projected savings from the House-passed reconciliation bill. Those savings would occur mainly because, under the legislation, outlays from new block grants between 2020 and 2026 would be smaller than the reduction in net federal subsidies for health insurance. Funding would shift away from states that expanded eligibility for Medicaid under the Affordable Care Act and toward states that did not. The number of people with comprehensive health insurance that covers high-cost medical events would be reduced by millions compared with CBO’s baseline projections for each year during the decade. CBO and JCT prepared this preliminary analysis for H.R. 1628, an amendment in the nature of a substitute [LYN17744], posted on September 25, 2017, on Senator Cassidy’s website.” (emphasis added)
- Reconciliation window expires: on September 30, the last day of FY 2017, the filibuster-proof “Budget Reconciliation” procedures expire that allow an ACA repeal-and-replace bill to pass the Senate with 50 votes. Reason: the procedures were made available by the FY 2017 Congressional Budget Resolution passed earlier in the year.
- August 2017: CBO releases report estimating effects on the federal budget, health insurance coverage, market stability, and premiums if payments for cost-sharing reductions would end after December 2017.
- July 28, 2017: Senate rejects Obamacare repeal 49-51.
- July 20, 2017: Senate GOP leaders released a further revised Affordable Care Act (ACA) repeal-and-replace bill July 20, 2017 in a continuing effort to secure 50 votes for passage. Link to bill text Section-by-section summary.
- July 20, 2017: CBO estimates the latest version of repeal-and-replace would increase uninsured by 22 million.
- July 19, 2017: CBO estimates a straight repeal of the ACA would increase uninsured by 32 million due to effective repeal of the individual mandate, elimination of the Medicaid expansion, elimination of subsidies to purchase health insurance, and increasing unavailability of individual (nongroup) health insurance in much of the country.
- July 13, 2017: Senator McConnell releases revised Senate bill, tentatively including the Cruz amendment allowing insurers to sell “skinny plans” — low-cost, health plans with fewer benefits that don’t meet Obamacare consumer protections, as long as they also sell ACA-compliant ones. Link to 7/13 bill text Section-by-section summary Part I Section-by-section summary Part II
- June 29, 2017: CBO estimates BCRA would cut Medicaid 35% over two decades.
- June 26, 2017: CBO estimates BCRA would increase uninsured by 22 million. Link to 6/26 bill text
- June 22, 2017: Senator McConnell releases draft Senate bill (“BCRA,” Better Care Reconciliation Act).
- June 8, 2017: HHS Secretary Price refuses to say whether ACA cost-sharing subsidies would continue.
- May 24, 2017: CBO estimates House-passed AHCA would increase uninsured by 23 million.
- May 8, 2017: McConnell appoints task force to develop Senate bill w/ hearings or open committee mark-ups.
- May 4, 2017: House narrowly passes a revised AHCA (217-213), without CBO estimates.
- April: House Leadership revises AHCA adding caps on the Medicaid program and permitting States to opt-out of ACA requirements.
- March 24, 2017: Lacking votes for passage, Speaker Ryan sets aside AHCA.
- March 13, 2017: CBO estimates AHCA would increase uninsured by 24 million due to Medicaid cuts, replacement of ACA subsidies with smaller tax credits, and repealing mandate.
- March 9, 2017: House Ways & Means and Energy & Commerce Committees vote to report fast-track Budget Reconciliation legislation to repeal and replace the Affordable Care Act (American Health Care Act, AHCA).
- March 8, 2017: The Hill: Battle Erupts Over “Trumpcare”
- March 8, 2017: FedWeb Blog on House GOP repeal-and-replace legislation
- March 6, 2017: House Republicans release legislation to repeal and replace the Affordable Care Act.
Ways and Means Committee Print
Ways and Means Section by Section Summary
Ways and Means Two Page Summary
Energy and Commerce Committee Print
Energy and Commerce Section by Section Summary
- March 3, 2017: CBO releases new estimates on cost of the Affordable Care Act, which shows the cost of insurance coverage provisions dropping substantially compared to original projections.
- Feb. 24, 2017: Obamacare repeal-and-replace leaked House draft
- Feb 21, 2017: House of Representatives and the Trump administration Justice Department filed a joint motion in House v. Price (formerly House v. Burwell) asking the court to continue to hold the case in abeyance “with status reports due every three months beginning May 22, 2017.” The motion stated further, “The purpose of the abeyance is to allow time for a resolution that would obviate the need for judicial determination of this appeal, including potential legislative action.”
- Feb. 16, 2017: House Republicans released a brief outline of their plan to “repeal and replace” the Affordable Care Act that calls for: eliminating the health insurance mandate and federal standards for insurance coverage; replacing health insurance subsidies with monthly refundable tax credits and an expansion of tax-preferred health savings accounts; and repealing the expansion of Medicaid for “able-bodied adults” while capping federal Medicaid payments to States, in an effort to cut projected Medicaid expenditures. The outline includes a goal of “protecting patients with pre-existing conditions,” although details are unclear. Tax credits would not be available to pay for any insurance plans that cover abortions. Taxes enacted to pay for Affordable Care Act subsidies would be repealed without details on how refundable tax credits would be paid for.
- Feb 7, 2017: CRS Report: Recent legislation to Repeal, Defund or Delay the Affordable Care Act
- May 12, 2016: A federal district court ruled on May 12, 2016, that the US Congress did not appropriate funds for the Affordable Care Act’s cost-sharing reduction (CSR) subsidies, and enjoined the government from making CSR payments to health insurance issuers. The court stayed the decision pending an anticipated appeal to the US Court of Appeals for the District of Columbia Circuit. Background: The Affordable Care Act requires insurers that cover marketplace enrollees to reduce cost sharing for enrollees with incomes not exceeding 250 percent of the federal poverty level; and requires the Department of Health and Human Services to reimburse the insurers for the cost-sharing reductions. On November 21, 2014, the House filed a lawsuit in the U.S. District Court claiming the cost-sharing reduction (CSR) subsidies were in violation of the Constitution because Congress had not appropriated funds for them. The Administration challenged the lawsuit claiming that the House had no legal standing to sue, and asked for the lawsuit to be dismissed. On September 9, 2015, the judge ruled that the House did have standing to pursue the claim that the Administration was violating the Constitution by paying cost-sharing subsidies without an appropriation. On May 12, 2016, the judge issued a decision on the merits, holding that Congress had not appropriated funds for the payment of cost-sharing subsidies. That ruling has been stayed while the case is on appeal to the U.S. Court of Appeals for the D.C. Circuit.” Read the full CRS Report Additional Background and Analysis
FedWeb Health Care Blogs
- Heavy Agenda as Congress Returns: Health, Budget, Spending Caps, Debt Ceiling, Tax Cuts, Appropriations 7/10/17
- McConnell Postpones Health Bill While Looking for 50 Votes; Senate Bill Adds 22 Million Uninsured and Cuts Medicaid 26% 06/29/17
- CBO Projects 23 Million Uninsured, More Instability under AHCA 05/31/17
- Healthcare: ACA Repeal-and-Replace 05/09/17
- Essential Facts About the American Health Care Act (“Trump-Ryan”) 03/24/17
- Budget Reconciliation, the Byrd Rule, and the Affordable Care Act 02/11/17
- See our Web Page: Reconciliation and the Byrd Rule
Key Provisions of the 2010 Affordable Care Act (“ObamaCare”)
ObamaCare in a Nutshell: (1) significant expansion of federal funds for the federal-state Medicaid program which provides healthcare to low-income Americans; (2) sizeable subsidies for low- and middle-income Americans to purchase private health insurance; (3) prohibiting insurance companies from denying coverage due to pre-existing conditions; (4) requiring insurance companies to cover children through their parents’ insurance plans until age 26; (5) require all insurance plans to provide essential benefits; (6) protect people with chronic and acute conditions, by banning lifetime caps on benefits; (7) in order to make the coverage expansion financially viable, established mandates for large employers and individuals requiring that insurance be purchased or a penalty paid; and (8) offsets federal government costs through new revenues, Medicare, and Medicaid reforms. Details follow:
- No Discrimination against Preexisting conditions: Prohibits insurance companies from denying coverage or charging higher premiums due to preexisting conditions (aka “guaranteed issue at community rates”) Excellent explanation of why coverage of Preexisting Conditions requires that everyone have insurance.
- No Lifetime Limits on Benefits: To protect people with chronic and acute conditions, insurance plans are prohibited from capping lifetime benefits.
- Medicaid Expansion for Low-Income Americans: Individuals and families below 133% of poverty ($33,534 for a family of 4) are entitled to Medicaid health coverage, which charges no premiums. Available in States that have accepted the federally-funded Medicaid expansion. Applies to citizens and legal immigrants.
- Premium Subsidies for Low- and Middle-Income Americans: For individuals and families above the Medicaid threshold and up to 400% of poverty ($97,200 for a family of 4), federal income-based subsidies are provided for premiums and cost-sharing. Applies to citizens and legal immigrants.
- Essential Health Benefits: requires non-grandfathered health plans in the individual and small group markets to cover essential health benefits, which include items and services in the following ten benefit categories: (1) ambulatory patient services; (2) emergency services; (3) hospitalization; (4) maternity and newborn care; (5) mental health and substance use disorder services including behavioral health treatment; (6) prescription drugs; (7) rehabilitative and habilitative services and devices; (8) laboratory services; (9) preventive and wellness services and chronic disease management; and (10) pediatric services.
- Individual Mandate to Broaden the Insurance Base: Similar to the requirement that all drivers purchase auto insurance so that costs can be spread over a large pool of insured, the ACA requires most U.S. citizens and legal residents to have health insurance or pay a penalty.
- Employers with 50 or more employees must offer coverage to employees — or pay a penalty of $2000 – $3000 per employee to help cover the cost of the Federal subsidies. Kaiser Family Foundation infographic explaining the employer mandate
- Small Employers (25 or fewer) entitled to a tax credit up to 50% of employer’s contribution.
- Private Sector Health Insurance – Competitive Marketplace: States to set-up health care “Exchanges” where people purchase private health insurance (with subsidies if they are low income); and a Federal health insurance exchange for States that do not establish their own.
- Children up to Age 26: can remain on their parents’ plans.
- New Revenues, Medicare and Medicaid Reforms to Pay for the Private Health Insurance Subsidies and Medicaid Expansion: Limit Flex Spending Accounts to $2500 per year; increase deductibility floor for health expenses to 10%; increase HI Payroll tax for high-income individuals; excise tax on employer-provided high cost “cadillac” health insurance plans; new fees on pharmaceutical manufacturing sector and health insurance sector; excise tax on medical devices (suspended for 2016-17); tax on indoor tanning. Medicare reforms: reduce annual payment increases; reduce special “disproportionate share” payments to hospitals serving low-income patients; allow providers organizing to meet quality thresholds to share in cost savings; reduce payments for excessive hospital readmissions and hospital-acquired infections. Reduce special Medicaid “disproportionate share” payments to hospitals serving low-income patients.
- CBO: Federal Subsidies for Health Insurance Coverage for People Under Age 65: 2017 to 2027
- CBO: The Effects of Terminating Payments for Cost-Sharing Reductions
- CBO: Health Care Spending Today and the Future – Impacts on Federal Deficits and Debt
- CRS: Use of the Annual Appropriations Process to Block Implementation of the Affordable Care Act
- CRS Nonpartisan Summary of HR 1628
- CRS: Report on High-Risk Pools
- Joint Committee on Taxation Revenue Estimates for the Affordable Care Act March 20, 2010
- CBO Affordable Care Act Cost Estimate March 20 2010
- Kaiser Family Foundation Fact-sheet-summary-of-the-affordable-care-act
- CBO: How Repealing Portions of the Affordable Care Act Would Affect Health Insurance Coverage and Premiums
- CBO Affordable Care Act Page
- CRS Private Health Insurance Reforms
- CRS Affordable Care Act Resources
- Patient Protection and Affordable Care Act