President Trump has been threatening to withhold CSR payments, or the cost-sharing reduction payments due to insurance carriers, because he thought Congress would be more willing to pass a replacement plan if Obamacare imploded and withholding what he called “bailouts” to the insurance carriers, was the fastest path to implosion.
Fortunately for the insurance carriers who need the $7 billion due to them for the CSR payments this year in order to keep premium prices relatively stable, the White House announced on August 16th that the federal government will make CSR payments in August. Members of Congress commented after the news was released that they need to act quickly to make sure the CSR payments are guaranteed for the next year too.
The CSR payments are reimbursements due to insurance carriers who give additional discounts in the form of tax credits to people who enroll in a silver plan and who earn between 100 and 200% of the federal poverty level. These people get subsidized plans and an additional tax credit – the cost-sharing reduction – to pay for their insurance plans.
The CBO also announced on Wednesday that if these CSR payments were not made to the insurance carriers, rates would increase by 20% immediately to offset those costs and the federal deficit would increase by $6 billion next year as well.