Withholding CSR Funds Could Push More Health Plans Out

Gregory A. Freeman, April 19, 2017

Refusing to pay health plans the subsidies for low income consumers, as President Trump has suggested, might push struggling insurers to leave the ACA marketplace.

If President Trump follows through with his suggestion that he might withhold subsidy payments to insurers as a way to force Democrats to the negotiating table, the move might have little effect on his political opponents but push struggling health plans out of the ACA marketplace.

The president indicated in an interview with the Wall Street Journal last week that he was considering not making the cost-sharing reduction (CSR) payments that insurers depend on to recoup the cost of covering very low income consumers. 

The goal would be to pressure Democrat leaders to negotiate on overhauling or repealing the Affordable Care Act, he said, but it could have more effect on insurers than politicians.

There is nearly universal support for continuing the CSR payments among healthcare stakeholders, and many Republican leaders have been favorable as well, notes Joel Ario, managing director with the consulting group Manatt Health.

That may make it difficult to get a majority vote in the House Republican caucus, he says.

Joel Ario

"In that context, the decision may well come down to President Trump, who has multiple ways to keep the payments flowing including simply deciding to continue the lawsuit or agreeing to further delays with the House Republicans," Ario says.

"The president is unlikely to gain any leverage with the Democrats by holding out since he pretty clearly will be blamed for the fallout if he cuts off the payments, especially now that he has acknowledged that he could keep the payments flowing."

The fallout could be severe, Ario says, with insurers on the edge deciding not to participate in 2018 and those that remain having to raise rates an estimated 19% to cover the shortfall. 

Gregory A. Freeman

Gregory A. Freeman is a contributing writer.

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