Alexander: Hardworking Tennesseans—Not Insurance Companies—Are the Ones Hurt By Congressional Inaction on Cost-Sharing Payments

Posted on October 31, 2017

“The hardworking Tennessean in the individual market, let’s take a look at her. She has already seen her premiums increase 176% over the last four years.  For 2018, it is going to be up another 36% on average.  She pays the whole bill. No government help.”

WASHINGTON, October 31, 2017—Senate health committee Chairman Lamar Alexander (R-Tenn.) in remarks on the Senate floor yesterday evening, said that hardworking Tennesseans—not insurance companies—are the ones hurt by congressional inaction on Obamacare’s cost-sharing reduction payments.

“When the 18 million Americans in the individual insurance market—those are Americans, shop keepers, song writers, farmers – men and women who don’t get health insurance from the government or on the job—when they begin enrolling on Wednesday, they’ll discover something very strange,” Alexander said. “Some of these 18 million Americans will be able to get their insurance for free—they will pay absolutely nothing for their premium. But others, others will see their premiums skyrocket far beyond the increases they’ve seen in recent years.”

According to the Wall Street Journal:

In nearly all of the 2,722 counties included in the data, some consumers will be able to obtain free health insurance because they qualify for larger federal premium subsidies that cover the full cost of a plan, according to the new analysis. … In the coming weeks, insurers are gearing up to promote the no-premium option. …

On the flip side, those who don’t get premium subsidies under the 2010 law may be responsible for the full brunt of steep rate increases, though they may be able to mitigate the impact by staying away from silver plans.

Alexander continued:

So insurers are gearing up to shepherd Americans into plans that will cost $0 – because taxpayers will be paying much higher subsidies. 

And meanwhile, Mr. President, the 9 million Americans in the individual market who do not have subsidies may be responsible for what the Wall Street Journal calls the “full brunt of steep rate increases.”

It’s happening because Congress has not funded cost sharing reduction subsidies, or “CSRs,” for the 2018 plan year. According to the U.S. District for the District of Columbia, the president could no longer make the payments himself without approval from Congress, so they ended this month.

Insurance companies have raised premiums to make up the difference, loading most of the increase onto the “silver” plan premiums.

They did that because, under the Affordable Care Act, subsidies are based on these silver plans premiums.

So as premiums go up, subsidies go up. If silver plan premiums skyrocket – then the subsidies skyrocket – and then you can use your giant subsidy to go buy a bronze plan and pay nothing in premium.

Alexander concluded:

If subsidized Americans aren’t hurt by stopping the payments and insurance companies are not hurt by stopping the payments, then Mr. President who is hurt by stopping the payments?

Hardworking low-income Americans making less than  $11,000 a year who do not qualify for Medicaid and Americans who make more than $47,000 a year who therefore have no government subsidies to help buy insurance. They must face these premium increases on their own.

The hardworking Tennessean in the individual market, let’s take a look at her. She has already seen her premiums increase 176% over the last four years.  For 2018, it is going to be up another 36% on average.  She pays the whole bill. No government help…

We can avoid this situation by enacting a bill that will both prevent this strange phenomenon, and reduce the federal deficit by $3.8 billion.

Senator Murray, the senator from Washington, the ranking Democrat on the Senate’s health committee and I introduced this bill. We were among 12 Republicans and 12 Democrats last week who proposed the bill and recommended it to the Senate and to the president and to the House of Representatives—after we conducted 4 hearings in the Senate health committee. In addition, we invited senators not on the Senate health committee to join us in the development of this bill and 37 showed up so we had about 60 of us that had some participation in the development of this proposal that Senator Murray and I recommended. We presented to the senate our recommendation for continuing cost sharing as well as to give states more flexibility in approving premiums, so people would have more choices and lower prices… 

During 2018, it would provide rebates to consumers state-by-state to those hardworking Americans with no government subsidy.   And it would begin to lower premiums in 2019. 

It would also give all Americans the opportunity to buy a new category of policy: catastrophic, so that a medical catastrophe doesn’t turn into a financial catastrophe. 

And it would give states more flexibility to write policies with more choices and lower prices. 

Many states want to do that, Mr. President. They need these additional flexibilities to stabilize their markets because problems with the individual market did not start with the uncertainty over the cost sharing payments. And we need to return power over the insurance markets to states if we want to begin creating long-term solutions. 

The President and many others have said they don’t want to bail out insurance companies.  I don’t want to bail out insurance companies. Senator Murray doesn’t want to bail out insurance companies. I don’t think I’ve run into anybody in the United States Senate who wants to bail out insurance companies. And our agreement doesn’t bail out insurance companies. In fact, it does just the reverse. 

If President Trump is looking for his majority he might find it Americans who don’t like higher taxes and who don’t like more government funding for Obamacare subsidies.

You can view Senator Alexander’s floor speech here, and read it in full here.

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