Speeches & Floor Statements

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

Posted on October 31, 2017

Mr. President, when the 18 million Americans in the individual insurance market—those are Americans, shop keepers, songwriters, 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.

The Wall Street Journal in a weekend story explained exactly how strange this phenomenon will be.

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.

Here is what the Wall Street Journal says:

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 the larger federal premium subsidies that cover the full cost of a plan, according to the new analysis. …

The Wall Street Journal continues:

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.

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.”

So, what is causing this strange phenomenon?

It’s happening because Congress, us, has not funded cost sharing reduction subsidies, or “CSR,” for the 2018 plan year. Cost sharing reduction subsidies are payments in the Affordable Care Act that the government makes to insurance companies to reimburse them for deductibles and copays for many low-income Americans. According to the United States District Court for the District of Colombia, the president could no longer make the payments himself without approval from Congress, so President Trump ended those payments 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 premiums.

In California alone—according to the Wall Street Journal article—about half of the 1.1 million who buy health insurance with subsidies can get their insurance for free next year. 

To be clear: Because Congress didn’t provide temporary funding for the cost sharing reductions for 2018, more than half of Californians on the ACA exchange can get free government-paid healthcare.

I’ve been saying for the past few weeks that the chaos we’re going to see if we don’t continue the cost sharing payments will be a 4-lane highway to single payer. Now we see why. Premium-free private insurance for millions funded by the taxpayer.

I’m not sure what is conservative about that, Mr. President.

We don’t need to worry about insurance companies. They obviously know how to take care of themselves.  As the article details, if the cost-sharing payments are not made over two years, insurance companies shouldn’t lose a penny.  They have to pay the co-pays and deductibles but they already have secured permission to raise premiums for 2018 to cover that. Because courts have said payments are illegal, they secured approval of rates that are 20% higher in 2018 just for just this purpose. So, the insurance companies are not hurt by stopping cost sharing reduction payments.

So, 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 as much as another 36% on average.  She pays the whole bill. No government help. 

Then take the American taxpayers. The Congressional Budget Office tells us that failure to continue to cost sharing reduction payments increase premiums and therefore the subsidies to pay for those premiums by $194 billion over ten years. $194 billion over 10 years added to the federal debt because we don’t continue the cost sharing subsidies.

So how do we avoid this?

Believe it or not – 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 

You may have noticed, Mr. President, that a growing number of Republicans and conservatives are recommending that Congress act to continue for two years the so-called cost sharing reduction payments as co-pays and deductibles for low-income Americans.

The head of the two tax writing committees—Senator Hatch and Representative Kevin Brady—introduced legislation that would continue cost sharing in 2018 and 2019.

In fact, earlier this year almost all House Republicans voted to continue cost sharing for two years as part of their repeal and replace Obamacare bill.  And Senators Bill Cassidy and Lindsey Graham have said the provision to continue cost sharing temporarily would have been part of their senate repeal and replace bill but senate budget reconciliation rules did not allow it.

President Trump has recognized this. He has asked for a short-term bill to prevent this kind of chaos. He encouraged me to talk to Senator Murray about this and he used cost sharing reduction continuation as a way to negotiate some more flexibility for states so they can approve more choices and lower prices, which is exactly what Senator Murray and I did, that’s what we recommended, the 24 of us – 12 Republicans and 12 Democrats – to the full senate last week. 

Some people still worry that continuing the cost-sharing payments is the same thing as propping up Obamacare, those are the words we hear, or bailing out insurance companies.

In fact, just the reverse is true.

As the article explains in The Wall Street Journal, cutting off the cost sharing payments—in the current circumstances—would increase insurance premiums on hard working Americans who have no government subsidies, it would increase the federal debt by nearly $200 billion over ten years, and it would spend billions more in taxpayer dollars funding Obamacare subsidies. 

Let me say that again, Mr. President.

As the Wall Street Journal article explains, cutting off the cost sharing payments—in the current circumstances—will increase insurance premiums on hard-working Americans who receive no government subsidies—up as much as another 36 percent in Tennessee, Mr. President--it would increase the federal debt by nearly $200 billion over ten years, and spend billions more in taxpayer dollars funding Obamacare subsidies. 

There are two groups of people who would be basically held harmless if Congress does not approve the cost-sharing payments. One, Americans with Obamacare subsidies, and 2, insurance companies.

On the other hand, according to the CBO report last week, continuing the cost sharing subsidies as part of the Alexander-Murray agreement would actually save taxpayers $4 billion, by reducing premiums and therefore Obamacare premium subsidies.  

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.

Somewhere the idea got started that continuing payments bails out insurance companies. But insurance companies are big boys and girls. They know how to take care of themselves and they’ve proved it once again.

Failure to continue the cost sharing subsidies is going to hurt tax payers and it’s going to hurt unsubsidized Americans who have no subsidy to help buy their insurance.

Mr. President, there’s nothing conservative about that.