"Cost-Sharing Reductions" and Why the GOP Wants to Eliminate Them

Let’s learn a little bit about how the GOP is about to destabilize the entire insurance market. As news of the “skinny repeal” the GOP is trying to force through Congress has spread, I want to talk a bit about what “cost-sharing reductions” are and why they are being heavily advocated for by medical health organizations.

Doctors would like to see Congress commit to funding cost-sharing reductions that low-income Americans who buy Obamacare policies use to pay their out of pocket costs. But for people new to the health insurance debate, you may be wondering just what the hell cost-sharing reductions are. I'm not saying I was wondering, but maybe you were, so I'm here for you. 

So: what are cost-sharing reductions? Cost-sharing reductions are discounts that lower the amount you pay for deductibles, co-payments, and coinsurance. They're a way for the government to work with insurance companies to keep deductibles low by, you guessed it, sharing the cost. This creates incentives for lower-income Americans to stay on insurance plans and facilitates stability in the insurance market. 

In 2013, Republicans sued the Obama administration, alleging that Congress had not appropriated the funds to the US department of Health and Human Services to cover cost-sharing. This case, House V. Price, has yet to be fully resolved, and was put on hold after Trump's election. The reason Republicans sued the Obama administration is that they don't want Congress to help foot the bill with insurance companies. Republicans want to save money by eliminating cost-sharing all together, which is what they proposed in the wildly unpopular American Health Care Act. 

Now, one can objectively see why the GOP has a problem with cost-sharing. They believe in smaller government and less financial regulation in the insurance market - which is understandable. The problem is that you can't create a universal healthcare plan that supports the entire nation without government help. So, even though cost-sharing reductions do take up a junk of government funding, they serve a very real purpose: to stabilize insurance markets so that health insurance is available to all Americans. 

If Congress ended cost-sharing reductions, the government would stop making payments to insurers. This means that insurers would lose money and therefore throw consumers off their coverage, even if they are mid-year through an insurance plan. Insurance companies that remain in the market then would have to increase their premiums to make up for the lost government funds and the entire insurance market would begin to collapse in on itself. 

The gist is that the GOP wants to save money by not allocating the funds to help lower deductibles for low-income families, effectively eliminating affordable healthcare options for millions of Americans. The problem is that, while they think cost-sharing doesn't work, in 2017 alone 7 million people qualified for cost-sharing reductions that would enable them to have affordable healthcare. That's only part of the estimated 16 million Americans who could be thrown off health insurance under the "skinny repeal" alone, the least dangerous of the GOP's current proposals.