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Understanding CSRs In The Health Care Debate


In the debate over health care, three letters are making insurance companies very nervous - CSR. It stands for cost-sharing reductions. It's a critical part of the individual insurance markets that were set up under the Affordable Care Act. And they're now in jeopardy. To help us understand what CSRs are and why people are so anxious about them we've called Julie Mix McPeak. She's the insurance commissioner from Tennessee and president-elect of the National Association of Insurance Commissioners. Last time we spoke to her she mentioned that the CSRs were causing her a lot of heartburn. Julie, welcome back.

JULIE MIX MCPEAK: Thank you so much. Glad to be here.

SHAPIRO: First, just explain what cost-sharing reductions are and why they're so important.

MCPEAK: Cost-sharing reductions were included in the original Obamacare act to assist those low-income consumers with their out-of-pocket expenses for health insurance - copayments, deductibles, coinsurance amounts - particularly for individuals in the 100 to 150 percent of the federal poverty level range.

SHAPIRO: So that money has been coming from the federal government. But President Trump says he's thinking about ending these payments. What would happen then?

MCPEAK: Well, certainly the discussion about ending these payments, which are flowing directly from the federal government to the insurers to offset those losses incurred for those individuals, is concerning to companies because number one, they have covered those losses and they had priced their premium rates expecting those reimbursements to come back through. So when there's any uncertainty surrounding the continuation of those payments, the insurers are doing two things. They are raising premium rates for 2018 and they're making decisions about whether or not to participate in the individual exchange markets across the nation.

SHAPIRO: So basically, if the federal government isn't paying this, then insurance companies are going to have to pay it. And you're saying they're probably going to pass that cost along to consumers.

MCPEAK: Right. They'll pass the costs on consumers or they will decide not to even participate in the exchange markets for 2018.

SHAPIRO: Well, that would obviously have dramatic consequences. Do you see consequences in the president even just hinting that he might end these payments?

MCPEAK: Well, I do. It's very concerning that we're watching all indicators from Washington, D.C., both from Congress and then the statements of the president himself about the bailouts being discontinued because, you know, we are really in a critical time for insurers to decide about participation decisions in markets. And then also, my colleagues and I are looking at rate increase requests that need to be approved by mid-August or so. And so when you don't know whether those cost-sharing reduction payments are going to be made, you know, past July, that could cause a premium rate increase of about 15 to 20 percent.

SHAPIRO: You use the word bailouts. That's how the president has described these payments. Do you think that's a fair characterization?

MCPEAK: I certainly do not think bailouts is a fair characterization. These payments were originally contemplated in Obamacare and have been flowing from the government to insurers to cover the real and accurate losses of these low-income individuals. And so I feel like it's much more of a contractual payment than a bailout for insurers.

SHAPIRO: So if insurance commissioners are having to make decisions about the future with this cloud of uncertainty hanging over them, what kinds of decisions are they making?

MCPEAK: Well, we're trying to make the best decisions that we have on the information that we have before us at that time. I ask for rate increase requests to come in assuming CSRs were not going to be paid so that we could break that out if something were to change in that regard. Other commissioners have asked for duplicate filings, one with and without CSR payments. And we're sort of waiting till the last minute to see which rate increase request we need to consider.

SHAPIRO: Wow. So in your state of Tennessee you're saying, let's just act as though the federal government is going to wash its hands of this, and other states are saying, well, let's hope the federal government stays engaged, and then we'll deal with it if they don't.

MCPEAK: Right. And very problematic is that none of us know. We're really watching the news and trying to determine on a month-to-month basis whether the payments will continue.

SHAPIRO: So ultimately, if President Trump and Health and Human Services Secretary Price say they want to let Obamacare implode, this sounds like a pretty good way to do it.

MCPEAK: It does. And that's what's concerning to all of us as regulators. I think that, you know, choosing to end the CSR payments even midstream in 2017 would cause chaos in the markets for 2018. And what we would really prefer is to have CSR payments funded through 2018 at least. That would provide a level of certainty for our insurers.

SHAPIRO: That's Julie Mix McPeak, Tennessee's insurance commissioner and president-elect of the National Association of Insurance Commissioners. Appreciate your coming back on the program. Thanks a lot.

MCPEAK: Thank you so much.

SHAPIRO: And this afternoon, after we recorded that conversation, we learned that the Senate plans to hold hearings in September focused on stabilizing the Affordable Care Act's marketplaces. Republican Senator Lamar Alexander of Tennessee, who chairs that committee planning those hearings, has called on President Trump to continue making CSR payments to insurers. Transcript provided by NPR, Copyright NPR.

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