The fate of the Affordable Care Act’s (ACA) CSR subsidies – or rather, whether they’ll continue to be federally funded – is a highly anticipated decision for healthcare stakeholders nationwide. Cost-sharing reduction subsidies are payments made to insurers that reduce co-pays and deductibles for qualifying individuals and families earning up to 250% of the federal poverty level who purchase health insurance through the insurance marketplaces. Their government funding is currently under legal challenge, awaiting the White House’s decision whether or not to drop the House v. Price lawsuit.
Recently, Politico.com reported that Republicans are inching closer to a decision regarding the fate of CSR funding. As this decision will affect healthcare stakeholders in every state, it is important for policymakers to understand the health and stability of the individual market and how subsidies have affected health insurance consumers. Recently, my colleagues and I at Milliman prepared a profile of the individual health insurance market for each state along with the District of Columbia. The profile summarizes insurer financials, marketplace enrollment, and federal assistance provided to households purchasing insurance coverage through the insurance marketplaces.
We’ve compiled some of our 2017 data into an infographic that takes a closer look at ACA cost-sharing subsidies to enable stakeholders to better understand the population currently receiving assistance and the amount of assistance being provided. The graphic looks at two metrics: the estimated average annual CSR subsidy per qualifying individual and the number of individuals receiving CSRs by state in 2017. Results below provide a clearer picture of which states’ populations more heavily rely on CSR subsidies and by how much. Florida has the largest number of CSR recipients of any state with approximately one million recipients in 2017. On a national level, we estimate that there are 5.7 million individuals covered by CSR subsidies nationally, and the sum of federal CSR expenditures will exceed $5.8 billion in CY 2017.
More data and analysis can be found at Milliman.com/hcr.
This blog post first appeared on LinkedIn.
The potential nonpayment of cost-sharing reduction (CSR) subsidies to health insurers, as required by the Patient Protection and Affordable Care Act (ACA), could create instability in the individual market. Issuers are now contemplating their exchange participation plans for 2018, and the future of cost-sharing reductions will play a key role in their decisions. This report by Milliman’s Pedro Alcocer, Frederick Busch, and Jason Karcher explores the possible legislative and regulatory outcomes and potential issuer responses.
Politico Pulse cited a new study performed by Milliman that examines cost-sharing reduction (CSR) subsidies under the Patient Protection and Affordable Care Act (ACA). The study was commissioned by the Association for Community Affiliated Plans.
Here’s the excerpt from the morning briefing:
FIRST IN PULSE: COST-SHARING SUBSIDIES ARE A SIGNIFICANT SHARE OF OBAMACARE REVENUES — Cost-sharing subsidies accounted for 7.8 percent of health plan revenues for customers enrolled in Obamacare plans in 2015, according to a new study commissioned by the Association for Community Affiliated Plans.
The study conducted by Milliman also found a huge discrepancy between states that expanded Medicaid and those that didn’t. Cost-sharing subsidies accounted for 4.8 percent of revenues in expansions states, but that share more than doubled in states that didn’t expand coverage. The amount of money at stake: $4.9 billion in assistance to 5.2 million exchange customers in 2015.
Why it matters: The future of the cost-sharing subsidies is in limbo. House Republicans sued to block the funding and won an initial court battle. But they’re being pushed by health plans to continue the payments now that they’re in control of the federal government. Otherwise, insurers warn, the Obamacare markets could collapse on their watch. “The loss of CSR payments in 2017 would trigger significant losses for many insurers in the individual market,” the study concludes. Read the report here.
Disparities in results between the cost-sharing reduction (CSR) advance payment formula and the actual CSR payment can strain an insurer’s cash flow. Insurers can request a revised payment from the U.S. Department of Health and Human Services (HHS) if they can demonstrate a substantial difference during the plan year supported by an actuarial certification. In this paper, Milliman consultants Esther Blount, Frederick Busch, and Scott Weltz discuss what is required to receive more accurate payments throughout the year.
In their article “CSR subsidies: Intra-year emergence,” Milliman’s Aaron Wright and Shyam Kolli assess the difference between prospective payments from the Centers for Medicare and Medicaid Services (CSM) and actual cost-sharing reduction (CSR) payments. They also discuss the effects that payments may have on quarterly financial statements for some carriers.
The Patient Protection and Affordable Care Act (ACA) introduced two subsidies for low- and moderate-income individuals to help make health insurance more affordable. These include premium subsidies to lower the initial purchase price of a policy and cost-sharing reduction (CSR) subsidies to lower the cost sharing (e.g., deductibles, copays, etc.) absorbed by individuals at the time they receive care. CSR subsidies, however, are administered in a complicated manner. In many cases the federal government may not reimburse the full cost, leaving the remainder on the shoulders of health insurance companies.
This Healthcare Reform Briefing Paper by Daniel Perlman and Jason Siegel outlines the design of the CSR subsidies under the ACA and its implementing regulations. The paper also describes how, depending on the reimbursement methodology agreed upon between issuers and the federal government, the regulations as currently written may under-compensate issuers of silver-level plans. Issuers should consider the scenarios described in this paper when choosing one of the CSR reimbursement methodologies allowed by the federal government.