How Stupid is the Decision to Eliminate CSR Payments?

Stupid to the Tune of $31 Billion in Additional Taxpayer Costs

The idiocracy that is the current Presidency is stopping the cost reduction payments required under ACA.  These payments reimburse insurance companies for lower the co-pays and deductibles required for low and middle income families.  They are required by law but since Congress has not appropriated the money to pay them a Federal judge has ruled they cannot be made if the President doesn't want to make them.  And now he says he don't.


But instead of saving money the move will be highly expensive.  From a forum by Charles Gaba.

Thanks to David Anderson of Balloon Juice for calling my attention to this analysis done by the Kaiser Family Foundation back in April which took a different methodolgical approach to this very scenario...and came to the following conclusion:

Any systematic increase in premiums for silver marketplace plans (including the benchmark plan) would increase the size of premium tax credits. The increased tax credits would completely cover the increased premium for subsidized enrollees covered through the benchmark plan and cushion the effect for enrollees signed up for more expensive silver plans. Enrollees who apply their tax credits to other tiers of plans (i.e., bronze, gold, and platinum) would also receive increased premium tax credits even though they do not qualify for reduced cost-sharing and the underlying premiums in their plans might not increase at all.

We estimate that the increased cost to the federal government of higher premium tax credits would actually be 23% more than the savings from eliminating cost-sharing reduction payments. For fiscal year 2018, that would result in a net increase in federal costs of $2.3 billion. Extrapolating to the 10-year budget window (2018-2027) using CBO’s projection of CSR payments, the federal government would end up spending $31 billion more if the payments end.

This assumes that insurers would be willing to stay in the market if CSR payments are eliminated.