CBO Confirms the Devastation of Terminating CSR Payments

This afternoon the Congressional Budget Office (CBO) issued a report confirming what we already know: Insurance premiums will rise 20 percent next year if President Trump scraps the key insurance subsidy called cost sharing reduction (CSR) payments:

If the administration chooses to stop making CSR’s as promised, premiums in the individual market will increase significantly, taxpayers will bear the cost, and choices will dwindle even further. The nonpartisan CBO also found eliminating the payments would increase the deficit by $194 billion over a decade because of higher federal government spending on premium subsidies. Further, “about 5 percent of people live in areas that would have no insurers in the nongroup market in 2018.”

As the Chamber made clear with the issuance of a document earlier this month, there are two absolutely critical steps that this administration and congress must do to protect the American people from further premium increases and stabilize the individual: Continue funding the CSR payments and extend the delay of the health insurance tax (HIT).

We have already heard two different reports quantifying the additional cost to the federal government that inaction on these issues will cause. Two different estimates predicted if CSRs are not paid and the health insurance tax remains:

• An additional $2.3 billion would have to be paid by the federal government; and
• Over 100 million Americans in 2018 will pay up to an additional $22 billion in higher health insurance premiums.

And now, the CBO is echoing the same dire assessment. If CSR payments are not made and the HIT remains on the books, premiums will increase, the federal government will be on the hook for even more money, and there will be even fewer choices for individuals and families. The time to act is now.

About the authors

Katie Mahoney

Katie W. Mahoney is the former vice president of health policy at the U.S. Chamber of Commerce.