Saving CSRs saves us all

The majority of all Americans – 178 million people – are covered by employer-sponsored health benefits. It is the most stable component of the nation’s health insurance system. Not surprisingly, therefore, most of the drama of the past several months regarding the Affordable Care Act (ACA) has concerned the roughly 10 million people who obtain coverage in the ACA’s insurance exchanges – many of which are in considerable turmoil.

One might assume, then, that the nation’s employers are not particularly concerned about the troubled individual marketplace, including the recent decision to stop making Cost Sharing Reduction (CSR) payments on behalf low income individuals who get their coverage from exchange insurance plans. That would be a seriously incorrect assumption. The vibrancy of the individual marketplace – and most immediately the fate of CSR payments – should be of concern to everyone.

{mosads}CSR subsidies are paid to insurance companies to defray deductibles, co-pays and other out of pocket costs that would otherwise make health coverage unaffordable for the nearly six million Americans – 57 percent of all people covered by exchange plans – on whose behalf the payments are made. CSR funding is authorized by the ACA. But the payment of the subsidies in the absence of an actual congressional appropriation is the source of litigation between the legislative and the executive branches.

The Trump administration’s recent decision to stop CSR payments sparked controversy but also reignited dormant bipartisan negotiations to stabilize the individual insurance market. Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander (R-Tenn.) and the committee’s senior Democrat, Patty Murray (Wash.), have come up with a legislative proposal to aid the individual insurance system. Among its central provisions is appropriating CSR funds through 2019.

So why does any of this matter to employers and millions of Americans covered by employer-sponsored plans?

Without CSRs, premiums on the exchanges will spike by an average of 20 percent, and the number of “bare” counties – those with zero insurer options – will increase. Employers rely on a viable individual health insurance market to provide coverage options for part-time workers, early retirees and those who prefer coverage through the exchanges, where they may be eligible for premium subsidies, rather than electing COBRA continuation coverage.

As insurers are compelled to raise premiums to make up for the sudden cut-off of CSR payments, the number of uninsured will rise. In the face of more uncompensated care, hospitals, doctors and other health care providers will inevitably shift costs to other stable payers. That means higher costs for employers, their workers and families. Employers already spend $691 billion annually for health care coverage. The cost shift will further drive up that astounding bill.

To add insult to injury, rather than saving money, the Congressional Budget Office estimates that ceasing CSR payments will cost taxpayers an extra $194 billion over ten years, as federal premium tax credits rise to help mitigate the impact of higher premiums in exchange plans.

Support for the Alexander-Murray deal from both the president and congressional leaders initially has been unclear. But with the indication that 60 senators are now in support, and a pledge by the Senate majority leader to bring the bill for a vote if the president endorses it, the prospects are hopefully looking more positive.

There are plenty of aspects of health policy around which Republicans and Democrats can and must have a robust debate. But it should be very easy for the president and Congress to agree to save health care coverage for our most vulnerable neighbors – and, by extension, mitigate costs for the rest of us who pay for health coverage – and, in the process, save federal coffers nearly $200 billion. A lot is at stake and time is of the essence for promptly getting this accomplished.

James A. Klein is president of the American Benefits Council whose members either sponsor directly, or provide services to, corporate employee benefit plans covering over 100 million Americans.