global Tax Senate Proposes a Compromise to ACA Subsidies Issue...Now in the Hands of the President October 19, 2017 The senate reached a bipartisan deal on Tuesday to fund ACA subsidies to insurers which President Trump moved just days ago to cut off. Will the deal pass through Congress? The Trump Administration announced last week that it would end the Affordable Care Act’s subsidies designed to help lower income Americans receive healthcare. This proposal has been met with controversy, and the Senate has now agreed on a short term two year deal to fight this issue, just two weeks before Americans start signing up for 2018 coverage. The bill must still be approved by Congress and signed by President Trump. What exactly do the subsidies cover? These subsidies, also referred to as cost sharing reductions, are payments directly made to insurers for subsidizing out of pocket costs, including deductibles for people who make 100-250 % of the federal poverty line and buy a silver plan on the exchange. Is it the same thing as tax credits? No, it is separate from tax credits. Tax credits offset the monthly premium for people who qualify. Why does Trump want to cut the cost sharing reductions? There is concern in the White House that the Obama Administration was paying the subsidies to insurance companies illegally; allegedly Congress never appropriated money for the subsidies. What’s at stake for those who rely on the subsidies? The subsidies, known as cost-sharing reduction payments, reimburse insurance companies for lowering deductibles, co-payments and other out-of-pocket costs for low-income customers. Without them, insurance companies said, many Americans will not be able to afford coverage. This, in turn, will prompt insurers to flee the law’s marketplaces. The short term solution The two year short term solution would allow subsidies to health insurers to continue, potentially lowering insurance premiums for those in the program next year. Trump stated that this short term solution will “get us over an immediate hump.” Along with the insurance subsidies, the package would give states new flexibility on how their Obamacare markets are run. It’ll also urge states to meld markets together, and let more people buy low cost, limited-coverage plans. Anti sabotage The agreement also includes ‘anti-sabotage’ provisions, which require the administration to spend $106 million in funds that it cut from outreach programs to encourage enrollment in the health law’s exchanges. In exchange, Democrats agreed to expand eligibility for cheaper, catastrophic insurance plans and make it easier for states to opt out of some of Obamacare’s regulations. These provisions are a result of Democrats feeling that Trump is purposely undermining the law. The president has stated that his actions are instead meant to dismantle the law since Republicans have not yet been able to repeal the ACA. Democratic minority leader, Chuck Schumer says, “I think there’s a consensus that we need short term stability. Details of the agreement are still being worked out.” Next steps The deal still has to make it through both houses of Congress and be signed by Trump. Latest Update The president is pulling back from accepting the compromise at its current stage. White House Press Secretary Sarah Sanders says, “We’ve said all along that we want something that doesn't just bail out the insurance companies but actually provides relief for all Americans. This bill doesn't address that fact, so we want to make sure that that's taken care of.” It is unclear at this point what language the President wants inserted into the current bill. Stay tuned for updates on how the bill fares in Congress and with the President—we’ll keep you informed.