What is happening with the Affordable Care Act's Cost Sharing Reduction payments?

The Trump administration has recently announced that it will not fund subsidies for lower-income consumers known as Cost Sharing Reduction (CSR) payments.

This is a complicated issue and President Trump appears to have made this move in order to under cut the Affordable Care Act.  In a statement from Covered California, Peter Lee explained that "These CSR payments don’t go directly to eligible Covered California members, instead health insurance companies lower the costs of some out-of-pocket expenses for eligible Californians, and then the insurers get reimbursed for that expense. "    While President Trump has been able to suspend these payments due to the fact that they are not automatically budgeted each year, in actuality for many people below 250% of the Federal Poverty Level, particularly in high cost states such as California, the Federal cost sharing subsidy cut will trigger an increase in premium support. This is because the Affordable Care Act rule that people should not pay more than a specific percentage of their income for health insurance costs still stands.

Covered California has announced that its members will not see any change in their health costs for the remainder of 2017 and published rates for 2018 Covered California for 2018 will not be affected. 

"Because the surcharge will only be applied to Silver-tier plans, nearly four out of five consumers will see their actual monthly premiums stay the same or decrease, since the amount of premium assistance they receive will also rise.


The effect of the federal government’s decision is something like this: Insurers get less money for helping low-income people with out-of-pocket costs on silver plans; premiums on silver plans increase more to compensate; and that forces the federal government to increase all APTC based subsidies to make sure people can still afford insurance."

However, Covered California had previously raised premiums to account for some of the uncertainty of the Federal government's actions.