Press Release - OCTOBER 20, 2017

Best’s Briefing: Cost-Sharing Reduction Subsidy Payments Cancelled Two Weeks Prior to Open Enrollment—What’s Next for Insurers?


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 Sally Rosen
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FOR IMMEDIATE RELEASE

OLDWICK - OCTOBER 20, 2017
If the cost-sharing reduction (CSR) subsidies cancelled by the Trump administration are not restored, A.M. Best expects health insurers’ fourth-quarter 2017 earnings to be negatively impacted, and while insurance companies could decide to exit certain states or the exchanges due to the elimination of the subsidies, the timing could be difficult for 2017 as notice is required for states and insureds.

On Oct, 12, 2017, the Trump administration ended funding of the CSR subsidy, a provision of The Patient Protection and Affordable Care Act (ACA), on Oct. 12, 2017; however, legislative efforts to fund the payments remain. A Best’s Briefing, titled, “Cost-Sharing Reduction Subsidy Payments Cancelled Two Weeks Prior to Open Enrollment—What’s Next for Insurers?” states that the profitability of the ACA exchange business likely will deteriorate as a direct result of the cancelled payments. However, earnings have been trending better through second-quarter of 2017, as compared with 2016, and the ACA exchange business represents a small percentage of total operations for many health insurers, which have remained profitable.

A.M. Best will continue to monitor developments that pertain to the restoration of the CSR subsidy payments and changes to the ACA.

To access a copy of this briefing, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=267248 .

A.M. Best is the world’s oldest and most authoritative insurance rating and information source.