CBO Estimates Impact of Ending CSR Payments

On August 15, the Congressional Budget Office (CBO) released its report estimating the impact of ending the cost-sharing reduction payments (CSRs) currently paid by the federal government to offset the cost of insurance in the public exchange market for individuals with income between 100-250% of the federal poverty level (FPL).  The payments are administered by the U.S. Department of Health and Human Services (HHS) and President Trump has recently expressed reservations about continuing the payments, which are also the subject of federal litigation.

In its report, CBO concludes that:

  • Failure to continue payment of CSRs would result in a 20% average increase in premium cost when purchasing sliver plans in 2018 and 25% higher beginning in 2020.  However, because the premium tax credits would adjust to compensate for the increased cost, many of these individuals would purchase silver plans that require them to pay a net premium amount similar to what they pay today.
  • The number of individuals residing in areas where insurers are not offering nongroup plans would be slightly higher in 2018 and 2019 at 5% but that insurers would likely offer plans in all areas by 2020.
  • Because the increased premiums would be taken into account in determining the amount of premium tax credits these individuals receive, the net effect of discontinuing the CSRs would increase the federal deficit, on net, by $194 billion from 2017 through 2026.
  • The number of people uninsured would be 1 million higher in 2018 due to the drop in the numbers of insurers participating in the market that first year but about 1 million lower beginning in 2020 because of the increased premium tax credits that reflect the higher plan cost resulting from the loss of CSRs.