“The biggest single reason for the sharp increase in rates is the lack of federal funding for “cost-sharing reductions” beginning in 2018. This is the program that helps lower-income ACA customers pay their out-of-pocket costs, such as deductibles and copayments.
Congress must authorize and provide funding for cost-sharing reductions, which amounts to about $7 billion annually. In a federal lawsuit filed last year, the House said the payments weren’t authorized.
Since then the issue has been a sticking point on the future of the ACA market. The latest news came earlier this week as the Trump Administration delayed a decision on whether to fight the House lawsuit. As a result, insurance companies can’t count on being paid for reducing cost-sharing for eligible ACA customers.
If the federal funding disappears, who makes up for that? Policyholders. That’s because premiums have to go up to cover those costs. Otherwise, insurers would not be able to sustain that business over the long haul.”