Subsidies’ end could boost rates by 20%

If Trump acts on threat, middle-class families would take a big hit.

WASHINGTON — Premiums for the most popular health insurance plans would shoot up 20 percent next year and federal budget deficits would increase by $194 billion in the coming decade if President Donald Trump carries out his threat to end certain subsidies paid to insurance companies for the benefit of low-income people, the Congressional Budget Office said Tuesday.

The subsidies reimburse insurers for reducing deductibles, co-payments and other out-ofpocket costs that low-income people pay when they visit doctors, fill prescriptions or receive care in hospitals. Nearly 3 in 5 HealthCare.gov customers qualify for cost-sharing help — an estimated 6 million people or more.

Even before efforts to repeal the Affordable Care Act collapsed in the Senate last month, Trump began threatening to cut off the subsidies, called cost-sharing reductions. He said that without them, the health care law would “implode” and Democrats would have no choice but to negotiate a replacement plan. Trump described his strategy as, “Let Obamacare implode, then deal.”

Those threats continue, though each month, the Trump administration has issued the subsidies.

The nonpartisan budget office has now quantified the cost of the threats, and potentially handed Democrats a weapon to force Congress and the administration to keep the money flowing.

“Try to wriggle out of his responsibilities as he might, the CBO report makes clear that if President Trump refuses to make these payments, he will be responsible for American families paying more for less care,” said Senate Democratic leader Chuck Schumer. “He’s the president

and the ball is in his court — American families await his action.”

If Trump stops paying the subsidies, the budget office said, insurers will increase premiums for midlevel “silver” plans, and the government will incur additional costs because, under a separate program, it provides financial assistance to low-income people to help them pay those premiums. Insurers in some states would withdraw from the market because of “substantial uncertainty” about the effects of the cutoff.

“About 5 percent of people live in areas that would have no insurers” in the individual insurance market in 2018, the budget office said.

The federal government helps pay premiums for low-income people by providing them with tax credits.

“Gross premiums for silver plans offered through the marketplaces would be 20 percent higher in 2018 and 25 percent higher by 2020 — boosting the amount of premium tax credits according to the statutory formula” established in the Affordable Care Act, the budget office said.

The budget office does not foresee much of an impact on the number of people who are uninsured if the cost-sharing subsidies are halted.

“The number of people uninsured would be slightly higher in 2018 but slightly lower starting in 2020,” it said.

The White House immediately dismissed the report, saying that the president is still weighing options. Insurance industry groups say they have seen no sign that payments due at the end of August will be halted.

“Regardless of what this flawed report says, Obamacare will continue to fail with or without a federal bailout,” White House spokesman Ninio Fetalvo said in a statement.

No final decisions have been made about the payments and “we continue to evaluate the issues,” he said.

The dispute over the subsidy payments dates back to 2014, when House Republicans filed a lawsuit asserting that the Obama administration was paying the subsidies illegally because Congress had never appropriated money for them. Last year, a federal judge agreed. The judge ordered a halt to the payments, but suspended the order to allow the government to appeal. The case is pending before the U.S. Court of Appeals for the District of Columbia Circuit.

The Trump administration has been providing funds for cost-sharing subsidies month-to-month, with no commitment to pay for the remainder of this year, much less for 2018.

Trump and some Republicans in Congress call the payments a bailout for insurance companies. But under the Affordable Care Act, insurers are required to provide the discounts to low-income people, who they say are the real beneficiaries.

Doctors, hospitals, insurers, consumer groups and the U.S. Chamber of Commerce have all urged Trump to continue paying the cost-sharing subsidies. Sen. Lamar Alexander, R-Tenn., the chairman of the Senate health committee, has said he plans to hold hearings next month with a view to producing bipartisan legislation that would stabilize insurance markets and provide money for the subsidies.

“Without payment of these cost-sharing reductions, Americans will be hurt,” Alexander said recently.