Ending cost-sharing reduction payments the government makes directly to insurers to subsidize coverage for low-income Americans on the ACA exchanges would cost the federal government an additional $12.3 billion in premium tax credits next year, but save only $10 billion, according to a new analysis from the Kaiser Family Foundation.
Future funding for the cost-sharing reductions remains uncertain amid a lawsuit filed by House Republicans challenging the legality of funding the payments without specific appropriation. In May 2016, a federal judge ruled in favor of the GOP, which brought the lawsuit against the Obama administration. The cost-sharing reductions have continued pending an appeal by the Obama administration. Now, the KFF notes, the Trump administration or a court order could potentially put an end to the payments.
If that occurs, insurers would need to raise silver premiums by about 19 percent on average in 2018 to compensate for the loss of cost-sharing reductions, according to the analysis. The KFF estimates premium increases would be about 15 percent on average in states that expanded Medicaid under the ACA and about 21 percent on average in states that did not.
With the premium increases, the federal government would take on additional costs for consumer tax credits. Overall, ending the cost-sharing reductions would result in a $2.3 billion net increase in cost to the federal government, according to the analysis.
Read the full analysis here.
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