Oct 27 2017
Earlier this month, President Trump told a conservative audience at the Heritage Foundation, “While I commend the bipartisan work done by Senators Alexander and Murray — and I do commend it — I continue to believe Congress must find a solution to the Obamacare mess instead of providing bailouts to insurance companies.”
The proponents of the Alexander-Murray health care bill have since tried to make the case that their legislation does not provide a billion-dollar taxpayer windfall to insurance companies. However, a Congressional Budget Office analysis of the legislation released earlier this week shows that is exactly what the legislation does.
The main component of the Alexander-Murray health care bill is an explicit appropriation for “Cost-Sharing Reduction” payments to insurance companies totaling approximately $18 billion from 2018 and 2019. The supposed purpose of this payout is to lower out-of-pocket health care costs for Obamacare customers.
These CSR payments were created by the Affordable Care Act in 2010, but Congress never appropriated money to fund the payments. Then in an illegal abuse of power, President Obama made the payments anyway. The House of Representatives eventually sued to stop him.
While President Trump continued to make CSR payments during the initial months of his presidency, a federal judge ruled this May that the payments were illegal. The Trump administration announced they would end the payments just this month.
According to the CBO, if CSR payments did end this month and Alexander-Murray did not become law, then insurance premiums eventually would rise for those buying insurance through the Obamacare exchanges. But since the vast majority of people buying insurance on the exchange also get subsidies, the actual price paid by many consumers would go down and the number of Americans with health insurance would go up.
If Alexander-Murray did become law, according to a new CBO report this week, premiums for 2019 would be lower while 2018 premiums, which already have been set, would not change. Insurers would still get CSR payments for 2018 even though many of them assumed they would not be getting CSR payments when they set their rates.
By allowing insurers to set rates without knowing they would get CSR payments, and then paying them CSR payments anyway, Alexander-Murray is a multi-billion-dollar windfall for health insurance companies.
Proponents of Alexander-Murray claim this insurer bailout is worth it because the bill also includes more flexibility for states and consumers. But nothing in the CBO report indicates that this new flexibility would do anything to lower premiums for consumers.
Shoveling billions of taxpayer dollars to health insurance companies that are already enjoying record-high profits is not a step in the right direction on health care reform. What American families really need is real regulatory relief from Obamacare’s draconian Title I regulations.
Only when states and families are allowed to set policies and choose insurance coverage that makes sense for them will we see meaningful decline in health insurance premiums.