If insurers flee the marketplaces because the federal governmentstopped making cost-sharing reduction payments, premiums on themost popular plans on Affordable Care Act exchanges could spike asmuch as 37 percent, and the number of uninsured Americans couldincrease by 9.4 million in 2018, according to a report by the UrbanInstitute, with funding from the Robert Wood JohnsonFoundation.

The fate of CSR payments is currently being decided on amonth-to-month basis. The Trump administration and the House ofRepresentatives have requested delays on the hearing of the House’s2016 lawsuit against the former Obama administration over the CSRs,arguing that the Treasury could not reimburse insurers for thesesubsidies because the funds had not been explicitly appropriated byCongress.

“The federal government is now paying the insurer reimbursementsone month at a time with no commitment to continue,” the studysays. “Congress could appropriate funds to make the payments andend the uncertainty, but so far it has not exercised thispower.”

The Urban Institute analyzed three 2018 scenarios that couldoccur if federal CSR payments stop:

Scenario 1. If insurers have enough time beforethe start of the plan year to incorporate their anticipated CSRcosts into a surcharge placed on silver marketplace premiums andare willing to remain in the marketplaces, then the surcharge wouldincrease silver premiums by 23 percent in 2018. About 600,000 morepeople would enroll in marketplace coverage, reducing the number ofuninsured. However, the federal government would spend 18 percentmore on premium tax credits than it would have spent on tax creditsand CSRs combined under current law, an additional $7.2 billion in2018.

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Scenario 2. If insurers exit the marketplacesin response to the loss of CSRs and other policy uncertainties andchanges, such as lack of clarity on intended enforcement of theindividual mandate and the administration’s substantially reducedcommitment to outreach and enrollment assistance, the number ofuninsured people would increase by 9.4 million, enrollment in theprivate nongroup market would decrease by 57 percent, and nongrouppremiums would rise by 37 percent. Eliminating the tax credits andCSRs would reduce federal spending on this assistance by $40.7billion in 2018.

The authors write that some states may experience scenario onewhile others experience scenario two.

Scenario 3. If lawmakers alter the ACA inresponse to the elimination of CSRs such that insurers are nolonger required to pay CSRs to eligible enrollees, 4 million morepeople would be uninsured, and nongroup premiums would rise by 12percent.

The authors write that this last scenario is possible butunlikely, “given the contentiousness of the current politicalenvironment.”

“By this point, pricing strategies have been developed in theevent that the cost-sharing reductions are not paid,” saysKatherine Hempstead, senior advisor at the Robert Wood JohnsonFoundation. “Yet these contingency plans pose challenges forinsurers, will be confusing to consumers, and ironically willprobably cost the federal government more.”