What is a Cost-Sharing Reduction (CSR)?

What is a Cost-Sharing Reduction (CSR)?

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In July, the bipartisan House Problem Solvers Caucus put forward the first and only bipartisan health care fix designed to stabilize the health insurance marketplace for small businesses, families, and individuals created by the Affordable Care Act (ACA). The proposed fix represents a huge step toward bipartisan compromise on health care.

For years, Republicans and Democrats have taken turns trying to reform the health system to the exclusion of the other party – an approach that has turned health care into an endless and contentious political fight. The Problem Solvers Caucus, a group of 44 members evenly split between Republicans and Democrats, recently worked day and night to put together a compromise plan designed to truly improve health care for all Americans by stabilizing the local individual health insurance markets. This article focuses on the first of the five points they prescribe: keeping insurance premiums affordable by making cost-sharing reduction payments permanent.

Cost-sharing reductions (CSR’s) are payments from the federal government that provide Americans earning under 250 percent of the poverty level with discounts for out-of-pocket health insurance payments like deductibles and co-pays. They help keep insurance costs affordable for everyone who buys insurance in the individual marketplace. But CSRs are not mandated in the law – they are provided at the Executive Branch’s discretion.

Although the Trump administration has agreed to continue funding CSRs in the short term, the insurance marketplace needs long-term security to keep premiums down. Without the existence of federal cost sharing reductions, insurers say they will have to raise premiums by 15 to 20 percent or more.

The Problem Solvers health care fix would bring CSR payments under the congressional oversight and appropriations process, but ensure they have mandatory funding. The Senate recently started holding bipartisan health care hearings with a focus on CSRs and are considering several elements contained in the Problem Solvers health care fix. We will be exploring other elements of the fix in future blog posts and keep you updated on the Senate hearings in the days and weeks ahead.

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