Web Briefing for Journalists:
ACA Cost-Sharing Subsidies: How One Decision
Could Disrupt Obamacare Marketplaces
Presented by the Kaiser Family Foundation
April 6, 2017
Rakesh Singh
Vice President of
Communications
Gary Claxton
Vice President
Kaiser Family
Foundation
Larry Levitt
Senior Vice
President for
Special
Initiatives
Kaiser Family
Foundation
Cost-sharing reductions, described
• The law provides two types of protections for lower-income
enrollees, premium tax credits and reduced cost sharing
– Recognizes that many lower-income people do not have the resources
to meet the deductibles and other cost sharing in nongroup policies
– For lower-income marketplace enrollees in silver plans, insurers
reduce the deductibles, out-of-pocket limits and other cost sharing,
with the cost reimbursed monthly by the government
• The authority to make these reimbursements is subject to a court
challenge by the U.S. House of Representatives
– Case in abeyance, next court date May 22
– House leadership suggesting it will appropriate funds as part of CR
– Uncertainty for insurers, may affect rates and even participation
Cost-sharing reductions, how they work
• Insurers offer variants of each silver plan which meet higher
actuarial values:
– Enrollees with incomes under 150% of poverty get a plan with an AV
of 94%
– Enrollees with incomes 150% to 200% of poverty get a plan with an AV
of 87%
– Enrollees with incomes 200% to 250% of poverty get a plan with an AV
of 73%
• Maximum out-of-pocket limits are reduced:
– Standard plans: $7150
– Enrollees with incomes below 200% of poverty: $2,350
– Enrollees with incomes 200% to 250% of poverty: $5,700
Cost-sharing reductions, by the numbers
• Total 2017 marketplace plan selection with a cost-sharing
reduction: 7,050,298
• Average federal payment per beneficiary of cost-sharing reductions
in 2016: $1,136
• Estimated total cost-sharing reduction payments in 2017: $7 billion
Source: HHS, Kaiser Family Foundation analysis, Congressional Budget Office
Cost-Sharing Reductions - Impact on Deductibles
Average Medical Deductible In Plans with Combined and Separate Medical
and Prescription Drug Deductible, 2017
$4,000
$3,609
$3,500
Combined Medical
and Prescription Drug
Deductible
$3,276
$2,904
$3,000
Separate Medical and
Prescription Drug
Deductible
$2,627
$2,500
$2,000
$1,500
$1,000
$809
$645
$500
$255
$172
$0
Silver
CSR73
CSR87
CSR94
Source: Kaiser Family Foundation analysis of Marketplace plans with the 39 states with Federally Facilitated or Partnership exchanges in 2017
(including Arkansas, New Mexico, Oregon, Kentucky, and Nevada). Data are from Healthcare.gov health plan information for individuals and
families available at https://www.healthcare.gov/health-plan-information-2017/.
Cost-Sharing Reductions - Impact on Out-of-Pocket Limits
Average Savings in Plan Deductibles Between Silver Plans and Cost-Sharing
Reduction Plans, 2017
$4,000
$3,354
$3,500
$3,103
$3,000
Combined Medical and
Prescription Drug
Deductible
Separate Medical and
Prescription Drug
Deductible
$2,800
$2,631
$2,500
$2,000
$1,500
$1,000
$705
$648
$500
$0
CSR73
CSR87
CSR94
Source: Kaiser Family Foundation analysis of Marketplace plans with the 39 states with Federally Facilitated or Partnership exchanges in 2017
(including Arkansas, New Mexico, Oregon, Kentucky, and Nevada). Data are from Healthcare.gov health plan information for individuals and
families available at https://www.healthcare.gov/health-plan-information-2017/.
How much silver premiums would have to rise to
compensate for loss of cost-sharing reduction payments
25%
21%
20%
19%
15%
15%
10%
5%
0%
All Healthcare.gov States
Medicaid Expansion States
Non-Expansion States
Source: Kaiser Family Foundation analysis of HHS data on cost-sharing reduction payments and premiums by county. Amounts represent costsharing reduction payments as a share of benchmark silver premiums for a 40 year-old in 2016.
Premium increases to compensate for the loss of costsharing reduction payments, states using healthcare.gov
30%
27%
25%
25% 25%
23% 23%
21% 21% 20% 20%
20%
15%
19%
18%
18%
17% 17%
17%
16% 16%
16% 15%
15% 15% 15%
15% 15%
14% 14%
14% 14% 14%
13% 13% 13% 13%
11% 11%
10%
10%
10%
9%
5%
MS
FL
AL
SC
GA
HI
TN
LA
NC
TX
MO
KS
VA
OK
WI
SD
ME
PA
AR
MI
NV
WV
UT
NE
NJ
WY
IN
IA
IL
AZ
OH
MT
NM
DE
AK
NH
OR
ND
0%
Source: Kaiser Family Foundation analysis of HHS data on cost-sharing reduction payments and premiums by county. Amounts represent costsharing reduction payments as a share of benchmark silver premiums for a 40 year-old in 2016.
Potential scenarios if cost-sharing reduction payments are
eliminated
• Insurers participating in marketplaces would likely raise premiums
for silver plans.
– For enrollees not receiving cost-sharing reductions, bronze and gold
plans would be a much better value.
– The cost to the government of premium tax credits would rise.
– There would be significant uncertainty for insurers, since the adequacy
of premiums would depend on the share of enrollees receiving costsharing reductions.
• Given the uncertainty, many insurers would likely exit the
marketplaces (particularly if cost-sharing reduction payments end
mid-year).
Today’s Web Briefing Will Be Recorded
The archived web briefing will be available later today.
Slides are available for download.
http://kff.org/health-reform/event/web-briefingfor-journalists-aca-cost-sharing-subsidies-how-onedecision-could-disrupt-obamacare-marketplaces/
Kaiser Family Foundation Resources
Estimates: Average ACA Marketplace Premiums for Silver Plans Would
Need to Increase by 19% to Compensate for Lack of Funding for CostSharing Subsidies
http://kff.org/health-reform/press-release/estimates-average-aca-marketplacepremiums-for-silver-plans-would-need-to-increase-by-19-to-compensate-for-lackof-funding-for-cost-sharing-subsidies
Impact of Cost Sharing Reductions on Deductibles and Out-Of-Pocket
Limits
http://kff.org/health-reform/issue-brief/impact-of-cost-sharing-reductions-ondeductibles-and-out-of-pocket-limits/
Consumer Assets and Patient Cost Sharing
http://kff.org/health-costs/issue-brief/consumer-assets-and-patient-cost-sharing/
Contact Information
Rakesh Singh, Vice President of Communications
Kaiser Family Foundation | Menlo Park, CA
Email: [email protected]
Phone: (650) 854-9400
Facebook:
Twitter:
Email alerts:
/KaiserFamilyFoundation
@KaiserFamFound
kff.org/email