In a memorandum from Acting Secretary of Health and Human Services Eric Hargan (who was just named Acting Secretary three days ago) to Centers for Medicare and Medicaid Administrator Seema Verma, the Trump administration has abruptly ended payments for cost-sharing reductions that assist millions of  low-income Americans (with incomes below 250 percent of the Federal Poverty Level) afford health insurance coverage obtained through the health insurance marketplaces established under the Affordable Care Act.  The payments are made to health plans who offer health insurance through the exchanges, and were ordered ended immediately. Health plans were expecting up to $7 billion in such payments this fiscal year.

Since health plans have relied on these payments in calculating their premiums, this executive action will result in dramatically increased health insurance premiums in the future (premiums for 2018 health plans have already been established, and the shortened month-and-a-half open enrollment for the marketplaces begins in two and a half weeks, on November 1, 2017). This action also will likely result in health plans declining to participate in the marketplaces at all, resulting in less competition, and also pushing premiums higher.

The terse three-sentence HHS directive is accompanied by a legal opinion from the U.S. Department of Justice that agrees with the legal position taken by House of Represetnative Republicans who have sued HHS, claiming that the cost-sharing reductions were “authorized but not appropriated” under the ACA, and therefore cannot be paid without Congressional appropriations under each fiscal year’s budget. Since all parties agree that one solution would be for Congress to appropriate the necessary funds, the executive action now places additional pressure on Congress to include such funding in the federal government appropriations bill for FY2018, which has been deferred to mid-December. Disaster relief for Texas, Florida, and Puerto Rico, President Trump’s tax plan, and the President’s other priorities such as more resources for immigration enforcement, also will make demands on that FY2018  budget.

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