Republican Governors Urge Funding of Cost-Sharing Reduction Payments

Governors say Obamacare market is unsustainable

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Republican state governors are urging lawmakers to fund Obamacare's cost-sharing reduction payments to stabilize the health insurance market, as premiums continue to rise and health insurers exit the market.

At a Senate Committee on Health, Education, Labor and Pensions hearing Thursday, three Republican governors told lawmakers that one way to stabilize the individual market is to fund the payments, which some have said were unconstitutional because they were made without an appropriation from Congress.

Gov. Bill Haslam (R., Tenn.) said in 80 percent of his state's counties there will be only one insurer, and premiums are increasing as much as 40 percent next year.

"The crisis of health care and the uncertainty of its future threaten our state's citizens and the state's budget," Haslam said. "Tennessee's experience of fewer choices at higher costs is not sustainable. We are on a path where citizens simply won't have an option to purchase from the insurance marketplace or can't pay for the limited options available to them. Either way, the system fails."

Haslam says Congress should fund cost-sharing reduction payments, give states flexibility, and create a short-term insurance program to help prevent collapse of the market. The governor noted that the marketplace was still facing collapse before the debate over whether to fund the payments even began.

"Failure to fund CSR payments will increase premiums significantly for our citizens, create even more uncertainty around the future of participating carriers and, according to the Congressional Budget Office, actually increase the federal deficit due to higher premium tax credits," Haslam said.

The Republican governor of Utah, Gary Herbert, agreed that the Obamacare market is unsustainable and that cost-sharing reduction payments should be funded to provide short-term relief: "I recommend establishing a clearly defined transition period that allows markets to incentivize the broadest, continuous participation in the individual insurance market possible while anticipating the adjustments needed to a market with less subsidization, less taxation, and less socialization."

"I do not believe that cost-sharing reduction (CSR) payments are the most transparent and effective way to assist low income individuals," Herbert said. "Nevertheless, in the near term, our individual insurance markets need predictability in order to price their products adequately. The sudden demise of CSR support would destabilize Utah's individual insurance market."

Charlie Baker, the Republican governor of Massachusetts, also said the payment should be funded to limit premium rate increases and increase stability in the marketplace.

Other reforms suggested by the Republican governors were to create a short-term reinsurance program to attract healthier individuals and lower premiums, giving flexibility to states through an expedited waiver approval process, and eliminating taxes.

"As Congress considers the fate of the individual mandate, we should look to market-oriented incentives to maintain and increase continuous participation in individual health insurance markets," said Herbert. "Congress can immediately reduce the cost of premiums by eliminating the Health Insurance Tax."

"The federal government can further stabilize the market by funding a temporary reinsurance program for high risk pools with an option for states to operate their own risk stabilization programs," Herbert added.

"Our goal is to get a result in a very short period of time on a 2018 stabilization package that is small, bipartisan and balanced," said committee chairman Sen. Lamar Alexander (R., Tenn.). "I'm hopeful that maybe some combination of continuing cost sharing for a period of time and significant changes in flexibility for states—probably, mostly through changes to section 1332 since it's already in the Affordable Care Act—might provide a basis for action we can take this month."

Ali Meyer

Ali Meyer   Email Ali | Full Bio | RSS
Ali Meyer is a staff writer with the Washington Free Beacon covering economic issues that expose government waste, fraud, and abuse. Prior to the Free Beacon, she was a multimedia reporter with CNSNews.com where her work appeared on outlets such as Drudge Report and Fox News. She also interned with the Heritage Foundation and Pacific Research Institute. Her Twitter handle is @DJAliMeyer, and her email address is meyer@freebeacon.com.

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