Support through your toughest HR challenges: A network of 285,000 HR professionals.
Shawn Premer shows how doing the right thing for employees leads to positive business results.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 12 cities across the U.S. this spring.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
Attorneys general from 18 states intervene to defend payments
Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.
Cost-sharing reduction (CSR) subsidies may not be a well-known term but, if they lose funding, the individual health insurance market may become too expensive for low-income families, according to 18 state attorneys general (AGs) in a lawsuit to fight the defunding of the payments.
CSR subsidies reimburse insurers for coverage alternatives for people earning at or below 250 percent of the federal poverty level—options that have lower co-pays, deductibles and co-insurance levels than are available to others.
Businesses also may be harmed if CSR payments do not survive. That's because insurers would likely respond to CSR defunding by raising their premium rates for companies, said Brian Johnston, an attorney with Jackson Lewis in Overland Park, Kan.
The individual market is an important resource for part-time workers and early retirees, which is another reason why some business groups, such as the American Benefits Council and U.S. Chamber of Commerce, favor maintaining the payments, noted Tim Stanton, an attorney with Ogletree Deakins in Chicago.
The D.C. Circuit permitted the AGs from 18 states, led by New York AG Eric Schneiderman and California AG Xavier Becerra, to intervene Aug. 1 in a case between the House of Representatives and the executive branch. The House originally sued President Barack Obama, alleging that he did not have the authority to make CSR payments without congressional appropriations.
CSR funding is pricey—$9 billion this year if paid in full and is expected to rise to $16 billion by 2026, according to the AGs. This is a cost the states cannot bear alone.
[SHRM members-only toolkit: Managing Health Care Costs]
'Bailouts for Insurance Companies'
President Donald Trump has made CSR payments so far to maintain the stability of the current insurance marketplace. But he tweeted on July 29 that the funds were "bailouts for insurance companies" and threatened to end the payments "very soon."
In its lawsuit, the House sued Obama for paying for CSR subsidies since the House had not approved CSR funds. The House argued that the funding was unconstitutional and the U.S. District Court for the District of Columbia agreed. The Obama administration appealed but the case stalled after Trump was elected.
On Aug. 1, Sen. Lamar Alexander, R-Tenn., chairman of the Senate Health, Education, Labor and Pensions Committee, "urged the president to temporarily continue the CSR payments through September so that Congress can work on a short-term solution for stabilizing the individual market in 2018."
State AGs Intervene
"According to the Centers for Medicare and Medicaid, in 2017, 7 million people qualified for CSR subsidies," said Amy Gordon, an attorney with Winston & Strawn in Chicago. "This is equal to approximately 58 percent of all exchange enrollees."
"State insurance and health regulators face deadlines in the next few months and must make critical choices, shaping their insurance markets for the next year," the AGs said in their brief to intervene. "Many of these choices turn on whether CSR payments will continue. The states must know, at a minimum, that someone will continue to defend this appeal and prevent the district court's injunction from going into effect."
Without CSR payments, insurers that stay in the exchanges would raise premiums, the AGs predicted. Some insurers would withdraw from the exchanges altogether. For example, Molina Healthcare, which provides exchange coverage to more than one million people in nine states, has said that without CSR payments it would not offer any plans through the exchanges.
If CSR funding does not continue, many are worried that some enrollees will not be able to afford insurance anymore, noted James Gelfand, senior vice president of health policy at the ERISA Industry Committee.
The D.C. Circuit's decision "gives the Trump administration less room to maneuver," Stanton said. "Before the ruling, the administration could have unilaterally dropped the appeal of the lower court ruling." But now the AGs "will be able to carry on that appeal, even if the administration would rather drop it."
Nicole Elliott, an attorney with Holland & Knight in Washington, D.C., said, "The decision is significant because it is likely that the Trump administration will not seek to pursue the appeal."
If Trump decides to halt CSR funding, the intervening states likely would join insurers and file for an immediate injunction, seeking CSR funds while the case is appealed, Johnston predicted.
Was this article useful? SHRM offers thousands of tools, templates and other exclusive member benefits, including compliance updates, sample policies, HR expert advice, education discounts, a growing online member community and much more. Join/Renew Now and let SHRM help you work smarter.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
CA Resources at Your Fingertips
SHRM’s HR Vendor Directory contains over 3,200 companies