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April 27, 2017

Trump administration will continue ACA's cost-sharing reductions—for now

Daily Briefing

The Trump administration will continue making the Affordable Care Act's (ACA) cost-sharing subsidies to insurers for the time being.

The cost-sharing reductions—which help low-income consumers pay for out-of-pocket health care costs and are being challenged by the House in court—in recent weeks had become a key issue in negotiations to finalize a spending bill to keep the government funded beyond Friday. The administration had been noncommittal on whether it would continue to make the payments without help from Congress, prompting Democrats to call for Republicans to include money for the ACA's cost-sharing subsidies as "mandatory funding" in a measure to fund the federal government that Congress must pass to avoid a government shutdown.

However, House Speaker Paul Ryan (R-Wis.) on Wednesday said the cost-sharing payments would not be included in the final bill. "Obviously, [cost-sharing subsidies]—we're not doing that. That is not in an appropriation bill. That's something separate that the administration does," Ryan said.

Insurers and health care organizations have been pressing the administration to explain how it will approach the payments, which insurers say are essential to stabilizing the ACA's exchange markets. Anthem CEO Joseph Swedish said the company would need clarity on the cost-sharing payments by early June in order to make a decision on premiums rates for the 2018 coverage year. He said if the payments ended in 2018, the company's participation in the exchanges would become "even more challenging." Anthem operates for-profit Blue Cross plans in 14 states.

White House to pay subsidies

The White House's commitment to paying the cost-sharing reductions came after House Minority Leader Nancy Pelosi (D-Calif.) spoke separately with Office of Management and Budget Director Mick Mulvaney and White House chief of staff Reince Priebus. The agreement reached by those parties appears to maintain "the status quo" of the administration paying for the cost-sharing reductions outside of the congressional spending process, Politico reports.

Pelosi on Wednesday released a statement confirming the White House's commitment to continuing the payments to insurers. "Our major concerns in these negotiations have been about funding for the wall and uncertainty about the CSR payments crucial to the stability of the marketplaces under the ACA," Pelosi said. "We've now made progress on both of these fronts."

But, according to STAT News, it remains unclear whether the White House will continue the payments over the long-term or if this is a temporary commitment.

The move to continue funding was supported by some Republican lawmakers, including Rep. Tom Cole (Okla.) who said the "subsidies ought to be continued until we have an alternative." However, others, including Republican Study Committee Chair Mark Walker (R-N.C.) criticized the payments, saying the subsidies are "both clearly illegal and unconstitutional."

Lawmakers consider continuing resolution

Lawmakers from both political parties are now eying a one-week spending bill to give them more time to reach a final deal, Axios' "Vitals" reports.

Pelosi in her statement said, "More progress needs to be made on some of our priorities, and we continue to be concerned about poison-pill riders that are still in this legislation" (Everett et al., Politico, 4/26; Facher, STAT News, 4/26; Dinan, Washington Times, 4/26; Nather, "Vitals," Axios, 4/27; Abelson, New York Times, 4/26). 

What does health care reform beyond the ACA look like? Join us on May 2nd

Stuart Clark, Managing Director

The first part of the Health Care Advisory Board’s latest “State of the Union” explores what the Trump administration and GOP-controlled Congress will mean for the future of coverage expansion, payment reform, and federal entitlement programs.

The presentation provides an objective analysis of the next era of health care reform, unpacking the potential futures of Medicare, Medicaid, and the private insurance market—and what those changes would mean for provider strategy. The presentation also includes a detailed assessment of the accomplishments, shortcomings, and unintended consequences of the Obama-era reforms.

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