Trump Takes Back Already-Budgeted Cost-Sharing Reductions, Forcing Premium Spikes & Confusion in Individual Insurance

Consumer advocates denounced as deliberately destructive and destabilizing the decision by the Trump White House to take back $7 billion in funding for already-budgeted cost-sharing reductions in the ACA.
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For immediate release: Thursday, October 11, 2017

For more information, contact:
Anthony Wright, executive director, Health Access California, 916-870-4782 (cell)
Rachel Linn Gish, communications director, Health Access California, 916-532-2128 (cell)

WHITE HOUSE ANNOUNCES DEFUNDING OF ALREADY-BUDGETED COST-SHARING REDUCTIONS, FORCING PREMIUM SPIKES AND CONFUSION IN INDIVIDUAL INSURANCE MARKET;

Most Californians Will See No Change in Cost–Only Because of Creative Covered California Workaround–But Confusion Will Reign

  • Trump Administration Action Costs Federal Government Money, But Would Lead to Higher Premium Costs & Consumer Confusion
  • Taking Back Already-Funded Covered California Subsidies Is a Deliberately Destructive Decision 
  • Coverage California Has Set It Up That the Surcharge Will Only Apply to Silver-Tier Plans Where Consumers Receive Federal Help – Therefore Their Subsides Will Also Increase; Those Without Subsidies Won’t See a Spike. 

SACRAMENTO, CA: Consumer advocates denounced as deliberately destructive and destabilizing the decision by the Trump White House to take back $7 billion in funding for already-budgeted cost-sharing reductions in the ACA. Such a decision forces insurers to spike premiums to reclaim these dollars, which have already been spent reducing co-pays and deductibles for low-income consumers.

“This shocking action is several steps beyond the sabotage of our health system, but more the equivalent of Trump swinging a baseball bat wildly in a china shop. This decision is deliberately destructive and destabilizing for the coverage of millions of Americans, for no discernible policy reason. This defunding of these already-budgeted funds does not save money but increases costs for both consumers and the federal government,” said Anthony Wright, the statewide health care consumer advocacy coalition. “The good news is that Covered California came up with a workaround to largely hold consumers harmless in our state, but even in California, this causes unnecessary complexity and confusion. In other states, this could cause the collapse of the individual insurance market, as it could here if Covered California didn’t have the will and wherewithal to protect consumers.”

California’s state-based individual health care marketplace, Covered California, announced yesterday that it will be imposing a 12.4% rate increase on Silver-tier plans. This “CSR surcharge” was made necessary because of the Trump Administration’s refusal to pay already-budgeted cost-sharing reduction payments that help people to afford their deductibles. Because this applies only to Silver-tier plans, most of the consumers that see the surcharge will also see an increase in their subsidies, therefore experiencing no change in the cost of their coverage.

There were more than 1.2 million subsidized Covered California members among the nearly 1.4 million people enrolled in CoveredCA as of March 2017. According to Covered California, an analysis on the impact of the CSR surcharge found that 78 percent of subsidized consumers would either see no change in what they would pay for insurance in 2018, or would pay less than what they would have paid if there had been no CSR surcharge. The remaining 22 percent will see some form of higher net premium because of the CSR surcharge, and about half of them will see increases of less than $25 per month. 

Californians who do not get financial help (not in a silver-tier plan or not in Covered California) will not be charged the surcharge. In addition, the small group of Covered California consumers with Silver plans who do not receive financial help to pay their premium, about 65,000 customers, can also avoid paying the surcharge by switching to a different metal tier or buying near-identical Silver coverage offered off-exchange. 

Resources:

Financial Help for Lower-Income Consumers at Risk

Health Access Analysis:200,000 At Risk to Lose Cost-Sharing Subsides in 14 CA Republican Congressional Districts

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