Despite President Trump’s warnings that he would let Obamacare implode if Congress didn’t pass a replacement plan and that the fastest way to an implosion is to withhold the CSR payments – or the cost-sharing reduction payments – due to insurance carriers this year, the White House announced on August 16th that it would make a payment to insurance carriers this month.
Under Obamacare, people who earned between 100-250% of the federal poverty level and who enrolled in a silver plan would get regular subsidies to pay their premiums and they would get an additional tax credit, which would be reimbursed to the insurance carriers, through these CSR payments.
According to the CBO, if the government didn’t pay the nearly $7 billion owed to insurance carriers for CSR payments this year, the cost of premiums would go up by 20% in 2018 and many insurance carriers would pull out of the market, which would leave 5% of the country living in an area with no health insurance plan options. Additionally, the federal deficit would increase by $6 billion next year if these payments weren’t made.
Although the GOP has failed to find a replacement plan that would work as well to stabilize the market, bring down the uninsured rate and bring down the costs of health insurance, it always understood that the CSR payments needed to be made to insurance carriers during the transition period in order to keep the immediate costs down and to keep insurance carriers in the marketplace. A number of people in Congress have commented recently that they hope to pass legislation soon to ensure that the CSR payments are made to insurance carriers for the immediate future.