Silver Loading coming full circle? Republicans may be about to hurt ACA enrollees even more...in the most ironic way possible...

Note: This is mostly an updated version of a post of mine from last May, when it looked as though Senate Republicans were going to include "funding CSR reimbursement payments" as part of their Big Ugly Bill (officially the "One Big Beautiful Bill Act") which, among many other terrible things, included gutting Medicaid and didn't include extending the ACA's enhanced premium tax credits beyond December 2025.

Thankfully, in the end the Senate GOP didn't include the CSR funding provision...but House Republicans did include it in a bill which they passed last winter...which then died in the Senate since it would have required 60 votes there to move forward.

Warning: This one is not only absurdly wonky, it requires me to fire up the Wayback Machine and dig deep into the ACA's 15-year history.

Here's the very short, very simplified version:

• The ACA includes two types of financial subsidies: Advance Premium Tax Credits (APTC), which reduce monthly premiums; and Cost Sharing Reductions (CSR), which cut down on deductibles, co-pays & other out-of-pocket (OOP) expenses for low-income enrollees.

• In 2014, then-Speaker of the House John Boehner filed a lawsuit on behalf of Congressional Republicans against the Obama Administration, in part because they claimed that CSR payments were unconstitutional because they weren't explicitly appropriated by Congress in the text of the Affordable Care Act.

• A long legal process ensued, the end of which resulted in a federal judge ruling in the GOP's favor and ordering that CSR payments stop being made...but also staying that same order pending appeal of her decision by the Justice Department (then still run by the Obama Administration).

• After Donald Trump took office the first time around in 2017, he started publicly threatening to "cutting off" CSR payments...and eventually did just that by having the Justice Dept. drop the appeal of the court decision on the CSR lawsuit.

• The way the CSR program worked until this point was unusual: Since the exact amount of OOP expenses varies widely month to month, insurance carriers would cover these costs up front and then submit their receipts to the federal government to be reimbursed.

• In other words, it wasn't the CSR assistance itself which Trump cut off; it was the reimbursement payments to the insurance carriers. (Put another way, the Trump Administration started stiffing federal contractors, which may sound familiar, but I'm getting off topic...)

Are you with me so far? OK, now we get to Chapter 2 of this ongoing saga:

• Ever since then, in order to prevent having to eat the costs of billions of dollars in CSR assistance, insurance carriers have instead simply jacked up their premiums to cover their CSR losses...and in most cases have placed the full load of CSR costs on Silver plans only, a practice known as...Silver Loading.

Here's a simple example of how Silver Loading works:

Let's say in a carrier projected that overall claim expenses in the next year would increase around 5%. To keep things simple, let's say they offered just 3 plans: One Bronze, one Silver (which happends to also be the "benchmark Silver" used to determine subsidies) and one Gold, priced at an average of $450, $600 and $750/month.

This carrier had exactly 100,000 enrollees & had to pay out $120 million in CSR assistance in Year 1. They assume that total enrollment and their CSR costs will be around the same (and the same ratios) for Year 2

Since they know they won't get reimbursed from the federal government for that $120M in CSR costs, simply raising their premiums by 5% would mean having to eat a $120 million loss. Ouch:

So, what did they start doing instead? They loaded their projected CSR losses onto the premiums.

Basically, they took the total amount ($120 million), divided that by 12 months ($10 million/month) and then divided that across their projected enrollment to figure out how much to tack onto each enrollee's monthly premium to make up the difference.

Now, if they simply divided that $10 million/month across all of their enrollees, regardless of the plan, they'd have to raise their premiums for every plan by around 22.6% to make up that difference, like so. This is called Broad Loading:

In 2018, some carriers did it this way, but most carriers in most states did something very smart instead: They Silver Loaded.

Silver loading involves concentrating the CSR costs so that they're only added to the Silver plans on the ACA market (as opposed to Bronze, Gold or Platinum). This means that instead of every plan going up by 22.6%, the Silver plans went up ~33% while the other metal tiers only went up ~5%:

The good news is that doing it this way holds Bronze and Gold plan enrollees harmless (along with Platinum enrollees, although there aren't many of those these days anyway).

The bad news is that Silver plan enrollees, who make up the bulk of all ACA enrollees, are royally screwed, right?

Well...no. Those who are unsubsidized are indeed screwed--they have to either downgrade to a Bronze plan or upgrade to a Gold plan to avoid getting hit with that 33% rate hike (in the latter case, notice that the Gold plan actually costs less at full price now even with the lower deductible...it's now a better value!)

However, the vast majority of exchange enrollees (even after the enhanced subsidies expired back in December) receive APTC subsidies...and the formula for those subsidies are based on the price of the 2nd lowest-cost Silver plan...but they can be applied towards any plan.

This is important for two reasons:

• First, it means that subsidized Silver plan enrollees see their subsidies increase by roughly the same rate that the premiums increased: If Silver premiums go up ~33%, APTC subsidies go up around ~33%. So they end up paying pretty much the same amount either way.

• Second, notice again that the Gold plan now costs LESS than the Silver plan...but the subsidies have still gone up as much as the Silver plan!

Let's say an enrollee qualified for $400/month in APTC in Year 1 (because the maximum they have to pay for the benchmark Silver is $200/month). In Year 2, their APTC would increase from $400/mo to $597/month...but they can use that $597/mo for any plan.

The Silver still costs them $200/mo, but suddenly the Gold plan, which would have cost $350/mo in Year 1, only costs $190/mo in Year 2! (Alternately, the Bronze plan, which would have cost them $50/mo in Year 1, will cost nothing in Year 2 since the APTC amount is actually more than the full-priced Bronze premium).

In a bit of tremendous irony, in attempting to sabotage the ACA, Donald Trump ended up unintentionally strengthening it. (And no, I guarantee you this was not some type of 11th Dimensional Chess move on his part; he barely understands how the ACA works much less how CSR subsidies operate).

By 2019, nearly every carrier in every state was Silver Loading, and as of today I think Mississippi is the only state which doesn't, though I could be wrong about that.

Silver Loading has resulted in millions of subsidized ACA exchange enrollees receiving more financial help than they would have otherwise, since a Bronze or Gold plan would now cost either about the same, less, or even nothing in premiums depending on where the enrollee lives.

This meant that the carriers got to be made whole on their CSR losses while millions of enrollees received more financial help and thus had lower net premiums for their policies.

And this is how things have been operating for the past eight years or so.

Still with me? OK, that brings things up to date.

Here's the thing: If cutting off CSR reimbursement payments resulted in Silver Loading becoming widespread, and Silver Loading led to higher APTC subsidies, and therefore lower net premiums for millions of enrollees in Bronze & Gold plans...what would be the results if the reverse were to happen?

Well, if CSR reimbursement payments were to be reinstated, that would mean that Silver Loading would end...and if Silver Loading ended, that should lead to Silver plan premiums dropping again...and if Silver plan premiums dropped, that would lead to reduced APTC subsidies...and higher net premiums for millions of Bronze & Gold plan enrollees.

What would the net result of doing this be in hard numbers?

According to an official 10-year projection by the Congressional Budget Office, the CSR funding provision of the bill which House Republicans passed in December would indeed reduce gross ACA premiums by around 11% on average...while also causing another ~300,000 ACA enrollees to lose healthcare coverage.

Put another way, this would mean that CSR reimbursement payments would finally be officially appropriated some 16 years after the ACA was signed into law, 12 years after John Boeher filed his lawsuit to end them, and 9 years after the Trump administration deliberately ended them.

If this happens, the truly ironic thing is that it would be done by Congressional Republicans...the same ones who filed the lawsuit to cut off CSR payments in the first place 12 years earlier.

In another surreal twist, all it would take for CSR payments to be appropriated in the first place, bringing an end to this entire saga, would be for the following 53-word bill to be passed & signed into law:

(b) FUNDING.—Section 1402 of the Patient Protection and Affordable Care Act (42 U.S.C. 18071) is amended by adding at the end the following new subsection:

‘(g) FUNDING.—Out of any funds in the Treasury not otherwise appropriated, there are appropriated to the Secretary such sums as may be necessary for payments under this section.’’.

And that brings me to today's news from Axios:

GOP weighs health care moves to pay for Iran war

Republicans are considering reductions in federal health spending to help pay for a budget bill containing as much as $200 billion to fund the Iran war and immigration enforcement.

...House Budget Committee Chairman Jodey Arrington (R-Texas) is reviving an idea that was considered last year to fund Affordable Care Act payments known as cost-sharing reductions.

The Congressional Budget Office previously found the move would lower overall benchmark ACA premiums by 11% but result in 300,000 more uninsured people.

It would have the effect of cutting the subsidy amount that some enrollees receive, thereby increasing out-of-pocket premium costs, while saving the government over $30 billion.

I should note as an aside that back in 2017, the CBO estimated that reinstating CSR funding would reduce federal spending by over $190 billion over the next decade...yet 8 years later they say it would only save $30 billion even though ACA enrollment has more than doubled since then. Hmmm...

In any event, Axios is significantly understating how many enrollees would be (further) harmed if this happened. Here's a breakout of ACA exchange enrollment as of the end of the 2026 Open Enrollment Period, broken out by metal level and household income bracket by Federal Poverty Level (I don't have the FPL breakout for Catastrophic or Platinum plans, but Catastrophic plans aren't eligible for federal subsidies anyway, and total Platinum enrollment is less than 96,000 nationally anyway):

...and here's the same table with enrollees currently helped by Silver Loading (in yellow) vs. those who would see a (modest) savings (in green) if CSR funding was reinstated (& Silver Loading was ended):

In other words, funding CSR reimbursement payments would slightly help* perhaps ~170,000 middle-class enrollees (who only need the break because of Republicans allowing the enhanced tax credits expiring to begin with) while significantly harming over 5.4 million lower-income enrollees in the process.

*(Oh yeah...and even that ~11% gross premium reduction for those ~170K enrollees would be coming after net premums shot up 58% on average for ACA enrollees due primarily to...you guessed it...the GOP letting the enhanced subsidies expire to begin with.

Put simply, Republicans plan on kicking another 300,000 people off their healthcare coverage and dramatically increase premiums for an additional ~5.1 million in order to pay for an illegal war which has already caused gas prices to go up more than 33% in the past month.

Anyone tired of all the winning yet?