Families USA agrees: Restoring CSRs *NOW* would hurt millions of low-income people

2018 MIDTERM ELECTION

Time: D H M S

This is exactly what Dave Anderson, Colin Ballio and I have been talking about for awhile now:

Under the Guise of “Health Insurance Stabilization,” Congress Should Not Axe Financial Help for Low-Wage Families

In negotiations over stabilizing the individual health insurance market, lawmakers are considering slashing federal health care assistance for low- and moderate-income consumers by more than $27 billion a year. In dollars terms, this would be a greater blow than completely eliminating, in one stroke, the Low-Income Home Energy Assistance Program, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the Child Care and Development Block Grant, the Community Development Block Grant, and federal grant programs for community-based mental health services and substance abuse prevention and treatment.

Families USA strongly supports the goal of stabilizing the individual market and lowering premiums paid by consumers whose incomes are too high to qualify for federal premium tax credits (PTCs). However, elements of the stabilization proposals under discussion are quite troubling. No stabilization package should rob low- and moderate-income households of the help they currently receive paying for health insurance unless that same package leaves them whole by fully compensating them for the major losses they would otherwise experience.

One part of the stabilization package would cut $27 billion a year from the tax credits on which low- and moderate-income families rely in buying insurance

Members of Congress are seriously considering restoring federal payments that cover health insurers’ costs of furnishing legally required cost-sharing reductions (CSRs) to low- and moderate-income consumers. If Congress takes this step, more than 2 million consumers could see their out-of-pocket insurance costs double, triple, or even increase seven-fold.

The "more than 2 million" figure is much lower than the 4.5 million I spitball-estimated the other day, but in the actual report itself, Families USA clarifies that:

The table greatly understates the number of adversely affected consumers, for several reasons: Many more PTC beneficiaries enrolled in non-silver plans for 2018 than for 2017. The 2018 boost to PTC amounts greatly cut these consumers’ premium costs for non-silver plans, the premiums of which were unaffected by CSR non-payment. In California, for example, the proportion of PTC beneficiaries enrolled in bronze, gold, or platinum plans rose from 31 percent in 2017 to 50 percent in 2018—a 60 percent relative increase. If comparable increases were experienced in all states with results shown below, the estimated total number of severely harmed consumers would rise from 2.0 million to 3.2 million.

This is still far lower than the 4.5 million I estimated...but truth be told, there's no way of knowing what the national total would because CMS STILL HASN'T RELEASED THE 2018 ASPE REPORT OR PUBLIC USE FILES YET. This is the longest they've ever gone without doing so, and there's no excuse whatsoever, especially since 41 states wrapped up the 2018 Open Enrollment Period way back on December 15th.

In any event, Families USA uses a very rough estimate of how much premium tax credit assistance of $27 billion per year based on CBO estimates:

At this juncture, restoring CSR payments to plans would slash tax credits for low- and moderate-income consumers by a surprisingly large amount. According to the nonpartisan Congressional Budget Office (CBO), paying insurers for CSRs would cut federal health coverage assistance by $247 billion from 2018-2026, averaging $27.3 billion a year*. This is far more than the $20.1 billion combined annual impact of completely eliminating all of the following programs

  • The Low-Income Health Energy Assistance Program (LIHEAP), which pays heating costs for 6 million low- and moderate-income households;
  • WIC, which feeds more than 7 million poor and near-poor pregnant women and infants;
  • The Child Care and Development Block Grant (CCDBG), which provides child care for 1.4 million children;
  • The Community Development Block Grant (CDBG), which helps 1,209 localities and all 50 states develop affordable housing and employment opportunities, mostly to benefit low- and moderate-income residents; and
  • The Community Mental Health Services Block Grant (MHBG), which provides mental health treatment to 7.4 million people;
  • The Substance Abuse Prevention and Treatment Block Grant (SABG), which helps 1.6 million people who struggle with substance use disorders.

They go on to explain a bit about how restoring CSR funding would help unsubsidized enrollees but hurt subsidized enrollees at the same time:

Supporters of this proposal argue that restoring CSR payments would lower premiums. That claim is misleading, even though unsubsidized silver premiums would rise more slowly than projected if CSR payments were restored. The vast majority of consumers enrolled in silver plans are tax credit beneficiaries, who do not pay the full premium. Their out-of-pocket premium costs would skyrocket if Congress pays insurers for CSRs.

To my surprise, they even link directly to the CSR Silver Load/Silver Switch spreadsheet set up by myself, Dave Anderson, Louise Norris and Andrew Sprung last fall ("20 states")!

Moreover, if Congress leaves current arrangements in place, states can shield unsubsidized consumers from harm by limiting CSR-related premium increases to marketplace silver plans and encouraging unsubsidized consumers to move to off-marketplace silver plans. 20 states have already taken this step. In addition, premiums would shoot up for unsubsidized consumers in gold plans if insurers’ CSR payments are restored, according to CBO.

As I noted the other day, the waters could be a bit muddier than Families USA describes it, if only because there's a possibility that CMS could potentially be able to prevent silver loading from happening next year at all...but assuming that's not the case, their point stands: The economics of appropriating CSR funding almost completely flipped around six months ago, to the point that it would likely end up harming more people than it helps without other mitigating factors included.