Effects of Alternative Insurer Responses to Discontinued Federal Cost-sharing Reduction Payments

About this book

Under the Affordable Care Act (ACA), insurers are required to offer cost-sharing reductions (CSRs) to eligible exchange enrollees who have incomes below 250 percent of the federal poverty level and are enrolled in silver-tiered exchange plans. CSRs reduce consumers' out-of-pocket health care costs (premiums, deductibles, and coinsurance), thereby increasing the actuarial value of plans. Under the original implementation of the ACA, the federal government made payments to insurers to cover the costs of CSRs. In late 2017, the Trump administration decided that federal payment of CSRs was unlawful and halted federal payments for CSR subsidies. A new congressional appropriation would be needed to reinstate federal CSR funding under this policy. Although the federal government is no longer making CSR payments to insurers, insurers are still required to provide CSR subsidies to qualifying enrollees. As a result, most states and insurers have adopted a practice known as silver loading to fund CSRs. In this report, the authors address the effects of disallowing this practice, in which only the premiums of silver-tiered individual market plans are increased in response to halted federal pa…