By guest blogger Liana Peruzzi, LMSW
As a medical social worker, the continual attempts to repeal and replace the Affordable Care Act (ACA) over the past year has caused a lot of uncertainty and anxiety among my patients. And if I’m being honest, it has caused me a lot of uncertainty and anxiety as well. I work primarily with adults who have a chronic conditions such as diabetes, hypertension or congestive heart failure, so maintaining access to medical care and medications is essential for them; living without insurance could be a life or death situation. It can be difficult enough to find affordable health insurance for low or middle income clients with a chronic illness in Austin, partly because Texas did not expand Medicaid. The prospect of a repeal and replace alternative that offered more limited coverage with higher premiums inevitably meant that some of my clients would have to choose between keeping a roof over their head and having access to medically necessary care. Needless to say, I breathed a sigh of relief when Congress could not pass a repeal and replace act in time for this year’s open enrollment.
While insurance companies have been doing their best to keep the marketplace stabilized in the face of opposition from Congress and tepid support from the White House, President Trump’s recent decision to end the Cost Sharing Reduction (CSR) Program in 2018, citing lack of appropriated funding for the program, has made this even more difficult. Insurance companies have been trying to determine if they want to stay in the marketplace based on whether the federal government would continue financially subsidizing healthcare for low and middle income Americans. But what is the CSR program, and how does it impact low and middle income people?
The Affordable Care Act has many cost reduction components built into the policy to insure that low-income Americans can still access affordable healthcare. The legislation currently requires that the cost of marketplace coverage is income-based. Therefore, the government currently subsidizes certain costs associated with health insurance. For example, premium tax credits are available for people between 100% and 400% the federal poverty limit (approximately $48,000 or less for a single adult) and these are currently paid by the federal government. The Cost Sharing Reduction (CSR) program is similar as it provides further financial assistance for co-pays and deductibles for people between 100 and 250% of the poverty limit (approximately $30,000 or less for a single adult) to keep down out of pocket costs. For example, in a typical silver plan, the insurance company pays 70% and the individual pays 30%. However, for those that qualify for CSR, that individual amount could be reduced to as low as 6%.
Up until recently, this program was being subsidized by the federal government. However, on October 12th President Trump wrote an executive order that ended federal funding for the CSR program starting in 2018. President Trump has been open about his opposition to the Affordable Care Act and his belief that the marketplace is failing. Since repeal and replace legislation have failed, this was his only way to weaken the marketplace without congressional support. So what does this mean for the 2018 marketplace and for ACA enrollees?
1. This does not impact the cost of marketplace coverage for people with low incomes (FPL 100-250%). First, it is important to highlight that this does NOT end the cost sharing reduction program for those that qualify, as it is a cost-saving mechanism built into the Affordable Care Act. Rather, it shifts the cost from the federal government to the insurance companies. And since insurance companies legally have to cover the costs, they will be shifting the additional costs to higher income enrollees. Many insurance companies already increased their 2018 premiums in anticipation that this might happen, and the national average increase is 34%.
2. This does not impact the cost of marketplace coverage for middle income people (FPL 250-400%).
Second, it is important to note that the federal government will still be providing tax subsidies to anyone who is under 400% FPL. So this means that the increase in premiums for people that qualify for tax subsidies will actually be paid for by the government. Some estimates suggest 80% of people enrolled in marketplace coverage receive some kind of tax subsidy, so this is good news for the majority of Americans. Unfortunately, this will put a higher financial burden on the federal government, because they will now have to subsidize more expensive health insurance premiums. The Congressional Budget Office estimates that this will add approximately $6 billion to the federal deficit in 2018, $21 billion by 2020 and $26 billion in 2026.
3. This does impact the cost of marketplace coverage for upper middle-income people (over FPL 400%).
The group of individuals who will be hardest hit by this legislation are people who are making more than 400% FPL (approximately $48,000 or more for a single adult). This group makes up about 20% of the overall marketplace. A quick search on healthcare.gov showed premiums ranging from $633-945 per month for a 55 year old male making $55,000 in Texas. Generally, the higher your monthly premium, the lower your deductible and out of pocket costs. However, for the $945/month silver plan, the deductible is still $3500 and the out of pocket maximum is $7350, which is incredibly high. For comparison, someone who qualifies for the CSR program would have a deductible between $550 and $1950 and out of pocket maximums for $2450 or less.
The Bottom Line
Trump’s decision to end the CSR program will not impact the majority of Americans enrolled in the marketplace. 84% of people enrolled in the marketplace are eligible for tax subsidies, which protects them from paying an increase in premiums, deductibles or out of pocket costs. That said, the cost of insurance will still increase, and the government will end up paying approximately $6 billion more in health care costs now that the CSR program has been cut. As for the 20% of Americans that do not qualify for premium tax subsidies, their premiums will increase by 20-34%, which could force people to go without insurance and pay out of pocket for preventive and routine medical care. And while there is at least one marketplace option in all Texas counties, this does not guarantee that patients can keep their established primary care and specialty doctors. The marketplace’s recent instability has led to many plans exiting and entering the marketplace at the last minute and could force patients to enroll in new coverage without the guarantee that their doctors will take a new plan. This could mean more struggles for my clients as they continue to seek solutions to getting the medical care they need.
Will Francis, LMSW
Government Relations Director,
National Association of Social Workers,
Cossy Hough, LCSW
Clinical Assistant Professor, The University of Texas at Austin,
School of Social Work
Anna Stelter, LMSW, MPH
Health Policy Analyst
Texas Health Institute
Alison Mohr Boleware, MSSW
Mental Health Policy,