The WasteWatcher: The Staff Blog of Citizens Against Government Waste

Will the Alexander-Murray Bill Prop Up or Make Big Changes to Obamacare?

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Late Thursday night last week, President Trump announced his administration would stop providing Cost-Sharing Reduction (CSRs) payments to insurers.  What are CSRs?  They are subsidies, or reimbursements, given to insurers by federal taxpayers for issuing reduced deductibles and copayments to low-income individuals that participate in the Obamacare exchanges.  CSRs are not payments given directly to low-income people to help them buy insurance

Why did the President Trump state his administration could no longer provide the CSRs?  Because the subsidies were illegal.

For the 2014 fiscal year, the Obama administration asked for an appropriation because the Patient Protection and Affordable Care Act (Obamacare) does not provide any funding for CSRs.  However, Congress never enacted any appropriations for the CSRs.  President Obama turned to his "pen and his phone" and disbursed funding for the CSRs in 2014 but, without the authority to do so.  As a result, the House of Representatives filed a lawsuit declaring the CSRs were illegal and a federal judge agreed.  The Obama administration appealed the court's decision and the subsidies continued into the Trump administration.  The appeal was put on hold as the Trump administration worked with Congress to get a legislative solution for all of Obamacare.  But, when the Obamacare repeal and replace effort failed in the Senate, President Trump had to deal with the House lawsuit.  The Department of Health and Human Services, Treasury Department, the Office of Management and Budget, and the Justice Department all agreed the payments were illegal and could not continue.

Soon after the decision, 18 Democrat State Attorneys General filed a lawsuit to block the president from cutting off the payments.

It is important to know that insurers are required by law to reduce premiums, copayments and out-of-pocket limits people with incomes between 100 to 250 percent of the federal poverty level, even if not reimbursed by federal taxpayers.  What will likely happen is insurers will shift their costs and premiums will increase across the board for everyone.  People will begin to see the true costs of Obamacare.  

Prior to the Senate’s last attempt to pass an Obamacare repeal and replacement bill, Health, Education, Labor, and Pensions Chairman Lamar Alexander (R-Tenn.) and Ranking Member Patty Murray (D-Wash.) were working on market stabilization legislation to continue the CSRs and prevent premiums from continuing to skyrocket.  After several weeks of negotiation, they released a bill on Wednesday, October 18, which would fund the CSRs for two years, provide flexibility to the states to design healthcare plans through waivers, added a “copper” plan for catastrophic insurance for people of all ages, and provides funding to consumer outreach organizations.  Currently, the bill has 24 Democratic and Republican sponsors.

But, while Sen. Alexander and others call the bill a “temporary fix,” many are concerned it will be a permanent patch to Obamacare.  According to an October 19, Inside Health Policy, Finance Chairman Orrin Hatch (R-Utah), whose committee would have to consider the bill, is opposed to the legislation because he said it would raise taxes.  Plus, senate leadership have not appeared eager to bring it to the floor for a vote.

Other Republican senators are calling for more changes to Obamacare in exchange for supporting the Alexander-Murray legislation. Proposals offered by Sen. Ron Johnson (R-Wisc.) would eliminate the individual and employer mandates, include the plan offered in President Trump’s October 12 Executive Order to extend short-term limited duration health plans that do not have to follow Obamacare’s heavy handed regulations, and an expansion of health savings accounts.  And while Sens. Bill Cassidy (R-LA) and Lindsey Graham (R-SC) are supporters of the Alexander-Murray legislation, they want it to be a temporary glide path on the way to get their legislation considered and passed into law.

Meanwhile, in the House, which would also have to vote on the legislation, Speaker Paul Ryan (R-Wisc.) is not supportive of the bill and believes the Senate needs to focus on passing legislation that would repeal and replace Obamacare.

For the moment, the Alexander-Murray bill is on life support.  

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