Liberal group warns ObamaCare funds would do ‘more harm than good’

A liberal group is warning against funding ObamaCare payments that are at the center of a debate in Congress, marking a shift from Democrats’ earlier position on the payments.

The Center on Budget and Policy Priorities on Friday published an analysis warning against funding the payments, known as cost-sharing reductions (CSRs), which are the at the center of a bipartisan bill aimed at stabilizing the ObamaCare marketplaces. The bill could be included in a government funding measure this month.

The analysis illustrates the debate among Democrats about the best path forward on stabilizing ObamaCare markets.

The analysis argues that funding the CSR payments would actually do “more harm than good” because of a quirk in the way the health law is structured. When President Trump canceled the payments in October, insurers raised premiums, which had the effect of increasing subsidies that help ObamaCare enrollees afford insurance.

{mosads}Funding the CSR payments now would therefore lower those subsidies, and raise the costs that enrollees who qualify for subsidies have to pay.

The author of the analysis, Aviva Aron-Dine, a former Obama administration health official, warns that “restoring CSR payments would likely harm millions of people” by raising their share of costs.

Funding the CSRs would help people with incomes too high to qualify for subsidies, but Aron-Dine argues that is not enough to justify making the payments.

She notes a more consequential move would be to block the Trump administration’s actions to open up skimpier, cheaper health plans known as short-term plans, which could siphon healthy people away from ObamaCare.

Senate Democrats have also grappled with the issue of whether making the CSR payments is actually harmful. Their solution was to both fund the CSRs and also increase the subsidies to prevent anyone’s costs from going up, an approach Aron-Dine praises.

But Republicans are sure to oppose any proposal to increase ObamaCare subsidies, making that proposal a long shot. 

Republicans are considering funding the CSR payments this month in the government funding bill, in addition to other stability funding known as reinsurance.

Despite the calculations around the effects of CSR payments, Democrats would be in a tough position if they actually wanted to oppose funding them, given that they denounced Trump for canceling them in October.

Some Democrats also argue that making CSR payments is still a good idea, given that it provides certainty for the market.