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News Posted on October 20, 2017

Professor Shanske Comments for Media on State Funding and Obamacare Exchanges

Professor Darien Shanske contributed an essay to Medium.com regarding possible actions that could be taken by states in response to the refusal of President Trump and Congress to make cost-sharing reduction (CSR) payments to insurance companies. The piece was referenced in a Washington Post op-ed by University of Chicago Law School Professor Daniel Hemel.

The CSR payments help defray the cost of insurance premiums for low-income consumers. These payments have been promised to insurance companies, but they have not been appropriated by Congress. Stopping the CSR payments could destabilize state insurance exchanges and lead to sharp increases in premiums, so some (like Hemel) have argued that states should consider ways in which they might step in to temporarily replace the federal funding. One option would be to turn to private investors, Shanske writes.

“The CSR payments are very likely to happen eventually and thus they have a lot of value right now,” writes Shanske. “If adequately compensated for the legal risk through interest payments, investors would likely advance most of the eventual value of the CSR payments today. Indeed, one might imagine that the opportunity to thwart the Trump Administration would lead to such an extraordinary response from investors so that the borrowing could end up very affordable indeed.”

Darien Shanske is a Professor of Law at UC Davis. His academic interests include taxation, particularly state and local taxation, local government law, public finance, and political theory, particularly jurisprudence.