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If CSRs Cease, 'Silver-Gapping' Could Benefit Some

By Gregory A. Freeman  
   August 23, 2017

Health plans are likely to raise premiums if cost-sharing reduction subsidies are halted. That would hurt many consumers, but some could actually benefit.

The Trump administration's recent concession on cost-sharing reduction (CSR) subsidies will not be enough to keep healthcare insurers from raising rates significantly for 2018, one analyst concludes.

That's because it would be way too to assume that the payments will continue. But it is possible some consumers could actually benefit from the dispute.

An effect called "silver-gapping" could result in some consumers receiving higher tax credits because of premium increases, which they could use to reduce expenditures for a basic health plan or help them splurge on a better plan.

That could mean that the predictions of millions of more uninsured Americans are overblown, says Dennis Deruelle, MD, FHM, national medical director for acute services with IPC Healthcare/TeamHealth. The company provides healthcare professional staff and integrated care providers in Tampa, FL.

Silver-gapping could even end up strengthening the insurance marketplaces, he says.

The administration agreed to pay the CSRs for August, but future payments will be decided on a monthly basis. Health plans can still change their rates up until Sept. 6, which means they must decide between now and then whether they can count on the CSRs continuing.

The Trump administration has threatened to withhold the subsidies as a way to put leverage on both Congress and insurers over healthcare reform, pointing out that Congress never appropriated money to fund the payments, which help compensate insurers for providing reduced premiums to low income people.

Gregory A. Freeman is a contributing writer for HealthLeaders.

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