The Effects of Terminating Payments for Cost-Sharing Reductions

Source: Congressional Budget Office, pub no. 53009, August 2017

Under the Affordable Care Act (ACA), insurers receive federal payments to cover costs incurred when offering plans with reduced deductibles, copayments, and other cost sharing to some people who purchase plans through the ACA marketplaces.

If those payments for cost-sharing reductions stopped after the end of this year, participating insurers would raise premiums to cover the costs. CBO and the staff of the Joint Committee on Taxation estimate that ending those payments would increase the federal deficit, on net, by $194 billion from 2017 through 2026, mostly because that change would result in increased costs for premium assistance tax credits. The number of people uninsured would be slightly higher in 2018 but slightly lower starting in 2020….