This past week, President Donald Trump announced that his administration would immediately stop cost-sharing reduction payments to insurance companies. This will cripple Obamacare plans and the lives of millions of Americans.
The announcement was made by the Health and Human Services Department on Thursday night and is expected to plunge the insurance sector into a state of chaos. The department said “we will discontinue these payments immediately,” according to ABC News and will undoubtedly cripple the Affordable Care Act.
What Are Cost-Sharing Reduction Payments?
When President Obama signed the Affordable Care Act in 2010, a key provision of the bill involved the federal government funneling billions of dollars to insurance companies across the country. These payments partially subsidize Obamacare plans and make them affordable to the public.
For the next six years, the Republican Party fought tooth and nail to try and halt these cost-sharing reduction payments and even took the government to court. When President Trump assumed office, he hinted these CSR payments would end shortly, yet the government continued to make these the payments on a monthly basis.
The next round of payments was due on October 20, according to various media outlets.
How Are Insurance Companies Reacting?
As dramatic as this seems, many insurance companies were anticipating this decision and enacted preventative measures. If we look at California, the state-based exchange Covered California adopted a 25 percent increase on their bronze and silver plans. These hikes safeguard insurance companies from experiencing a devastating financial loss due to the fact they will no longer be receiving federal funding.
Although, experts within the industry are saying this abrupt decision could result in an increase in premiums for the next few years. This would make health insurance plans more expensive for Americans, which in turn would force more individuals to rely on programs like Medicaid, which also relies heavily on federal funding.
This report comes on the heels of Trump reportedly becoming frustrated with the lack of progress of the repeal and replace efforts made in Congress.
This report comes on the heels of Trump reportedly becoming frustrated with the Republican attempts to repeal and replace Obamacare in Congress. So, he’s decided to use his executive powers to bring this debate to the forefront of the American conscious and spur a renewed discussion amongst the political elite in Washington DC.
Who Will Be Affected?
According to the same report by ABC News, this decision will impact 60 percent of individuals who utilize Obamacare plans. The cost-sharing reduction payments equate to approximately $7 billion worth in federal funding and can reduce health insurance plans by thousands of dollars, therefore making them affordable.
We understand this news can be unsettling, and if you think you’re 2018 plan will be affected by this decision, you can always contact us here at HealthQuoteInfo. Contact one of our agents, and we’ll help you sort through all the facts and create an informed plan of action in regards to your health insurance. Phone us today at 855-614-5057.