Lowering premiums is not necessarily lowering spending.
The Cost-Sharing Reduction (CSR) program is a key provision of the Affordable Care Act (ACA, or Obamacare) designed to make health insurance more affordable for lower-and moderate-income people by reducing their out-of-pocket costs when they use medical services.
How CSRs Work
• CSRs are only available to eligible individuals who enroll in a Silver-level plan through the Health Insurance Marketplace (HealthCare.gov or state-based exchanges).
• They lower specific out-of-pocket expenses, including:
• Deductibles (the amount you pay before insurance kicks in).
• Copayments (fixed fees for doctor visits, prescriptions, etc.).
• Coinsurance (your percentage of costs after the deductible).
• Out-of-pocket maximum (the most you’d pay in a year for covered services).
For example, someone at 150% FPL might see their deductible drop from thousands to just hundreds of dollars, with much lower copays for visits and drugs, and a reduced annual out-of-pocket limit.
Eligibility
• You must qualify for premium tax credits (another ACA subsidy to help pay monthly premiums).
• Household income must be between 100% and 250% of the federal poverty level (FPL). (For 2026, roughly $15,060–$37,650 for a single person or $31,200–$78,000 for a family of four, though exact figures adjust annually.)
• You must enroll in a Silver plan (56% of all ACA enrollees are in silver plans — CSRs aren’t available on Bronze, Gold, or Platinum plans.
• Special rules apply for certain Native American/Alaska Native individuals, who may qualify for additional reductions.
Funding and History
• The ACA requires insurers to provide these reduced cost-sharing amounts to eligible enrollees.
• The federal government is supposed to reimburse insurers for the extra costs they incur (since they’re covering more of the enrollee’s expenses).
• From 2014–2017, payments were made, but in 2017 (during Trump’s first term), the administration stopped making these reimbursements due to a legal dispute over congressional appropriations.
• Insurers responded by raising premiums on Silver plans (a practice called “silver loading”), which increased premiums overall but also boosted premium tax credits for many enrollees, offsetting costs for some.
• Funding CSRs directly (as proposed in Trump’s January 2026 “Great Healthcare Plan”) would eliminate the need for silver loading, lowering Silver plan premiums (by over 10% per White House/CBO estimates) and saving taxpayers money in the long run by reducing the inflated premium tax credit payouts. The plan highlights this as a way to cut costs without fully repealing ACA elements.
In short, CSRs act like built-in discounts on your medical bills (not premiums) for qualifying low-to-moderate-income Marketplace enrollees on Silver plans, making care more accessible when you actually need it. The recent Trump proposal focuses on fully funding these reimbursements to insurers to stabilize and lower premiums in the ACA marketplaces.
Premiums reflect the cost of providing coverage-lower cost sharing=higher premiums. Unless deductibles, and other out of pocket costs increase with higher medical costs, the impact on premiums grows as more expenses are above the deductible and thus eligible for reimbursement.
Paying insurers for these costs using Cost Sharing Reduction payments doesn’t change that.
So, unless deductibles and other out of pocket costs are raised to account for healthcare cost inflation along with CSR payments, premiums and ACA subsidies must continue to rise to account for the higher spending by insurers on more eligible claims.
If out of pocket costs are increased for Silver plans, then the CSR payments must increase accordingly, so it is hard to see any net, net savings for government or taxpayers.
Bottom line-silver plan premiums drop because taxpayers are now paying more out of pocket costs directly. Premiums must still increase for increased healthcare spending and inflation.
If premiums are lowered and out of pocket costs lowered or eliminated, is the incentive for patients to not care what they spend on healthcare increased?
When a deductible is lowered, medical care becomes “cheaper” for the member at the point of service. This often leads to induced utilization, where people who previously avoided the doctor due to high upfront costs now seek care.
- Result: The insurer doesn’t just pay an amount equal to the lowered deductible on existing claims; they also pay for entirely new claims that wouldn’t have happened if the deductible were higher.
If deductibles are not raised in step with healthcare spending they become less valuable in controlling premiums.
QUINNSCOMMENTARY 