Cost-Sharing Reduction Payments

What you heard:

The Trump administration is threatening to end payments to insurance companies in order to sabotage Obamacare.

What it is:

The payments that Trump and his lackeys often refer to as “bailouts” are technically called cost-sharing reduction payments (CSRs). The federal government pays out CSRs to insurance companies, to the tune of approximately $7,000,000,000 per year. Obamacare requires insurers to provide plans with certain benefits, but also established pricing limits to keep plans affordable for low-income people. CSRs help offset the costs of providing care, so insurers don’t take massive losses or hike customer costs elsewhere.

Obamacare, also known as the Affordable Care Act, is the massive piece of legislation that totally transformed 1/6 of the US economy. Ya girl Nancy Pelosi shepherded it through Congress like a goddess, and then President Obama signed it into law in March of 2010. It includes such wonderful things as Essential Health Benefits, the individual mandate, and Medicaid expansion. Republicans have been trying to undo the thing for nearly a decade, most recently with a failed set of Senate votes.

What it means:

If you’re wondering “How can the Administration just stop payments? The government shouldn’t work like that,” you’re right. To grossly simplify what I’m sure is thousands and thousands of pages of federal law, government spending generally has to be approved and overseen by Congress.

Normally, CSR funding would have been included in the bill passed by Congress and signed by Obama, but a drafting error in the ACA meant that the funds were not explicitly automatically appropriated with the vote to pass the healthcare bill. NATURALLY, your Republican friends in Congress sued the federal government, saying that they – and they alone – had the power to appropriate the payments. Of course, the Obama administration, heading the federal government at the time, challenged the lawsuit. A court ruled the funds could continue going out as the case worked its way through the courts.

Unfortunately for the 65.8 million Americans who did not vote for the crazy old man who screams at the TV all day, the federal government is now in Donald Trump’s hands. If he was to drop the challenge to the lawsuit brought by the House Republicans, they would win the case – so CSR funding would have to go through a Congressional appropriations process. And we’ve all seen how super good Republicans have been doing at the actually-passing-legislation part of their jobs recently.

What could happen:

According to the Kaiser Family Foundation, pure chaos. That’s their technical term, not mine. Insurers would end up taking massive losses on cheap plans that they’re still required by law to provide. They could hike premiums by up to an estimated 27% in some states. They could also just decide to not provide plans on the individual market and pull out – leaving wide swaths of the country without any coverage options at all. Did I mention that health care is one-sixth of the economy? Creating chaos in such a massive industry would have certain repercussions elsewhere.

Thankfully, some Congressional Republicans are willing to work with their Democratic counterparts to not take us back to 2008. High ranking Republican Senators have publicly called for the Administration to continue funding CSRs. House Republicans have introduced bills to shore up the subsidies. Things seem… promising.

Nothing is ever sure with this Administration or this Congress, though, so make sure you’re still holding onto your hats, kiddos. If you want to sleep a little easier at night, try calling your Senators to express your support for funding CSRs. Or for whatever else you want to talk about, really. I hear it works.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s