Analysts: Ending ACA Cost-Sharing Payments to Affect Middle Class

By Joey Berlin 

The Trump administration made a splash in October by announcing an end to government subsidies that help insurers provide discounts to low-income enrollees in the Affordable Health Care marketplace.

However, analysts say it won't be low-income people who will feel a financial hit from President Donald Trump's decision on the cost-sharing reduction (CSR) payments. Instead, people with higher incomes pick up the tab, analysts said.

After the administration's announcement, 18 states and the District of Columbia sued in an attempt to force CSR payments to continue, but a federal district court judge rejected that suit. At press time, lawmakers reportedly were working on a possible legislative solution that would authorize the CSR payments.

ACA requires health plans to provide eligible customers discounts on copays and deductibles; otherwise, they must back out of their federal contracts. For those who remain, raising premiums is the only option to recoup the costs. Many health plans already have requested premium hikes for 2018 in anticipation of the subsidy cut.

The premium hikes won't affect the low-income enrollees the CSR payments are meant to help, as those people receive tax credits that increase accordingly with any rise in premiums.

"Enrollees who qualify for premium subsidies — which are separate and unaffected — won't have to pay much more, though they may need to switch plans to keep their rates steady," a CNN Money article said. "But middle-class Americans who earn too much to get premium subsidies could get walloped by higher rates."

A Kaiser Family Foundation (KFF) analysis found that premiums in states using HealthCare.gov (like Texas) will "rise substantially" overall, but lower-income consumers receiving premium tax credits will pay less in 2018 than they did in 2017. 

The analysis found that on average, a 40-year-old person who makes $35,000 per year and is eligible for a premium tax credit would pay 36 percent less in premiums for the lowest-cost bronze plan, 6 percent less for the lowest-cost silver plan, and 12 percent less for the lowest-costing gold plan. Subsidized enrollees with lower incomes will see even lower premiums, according to the analysis. In fact, in nearly 1,700 counties, the premium tax credit would cover the full cost of an ACA bronze plan for a 40-year-old who makes $25,000 per year, the analysis said. 

Action, Dec. 1, 2017

Last Updated On

December 05, 2017

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