A chance for government to spend more, stick it to poor

Catherine Rampell

Who says President Donald Trump isn’t a policy genius? He’s fifigured out a clever way to spend more government money just to stick it to poor people.

His innovation has to do with the intricate interplay of Affffffffffffordable Care Act subsidies.

Obamacare has two major kinds of subsidies. The fifirst is a tax credit that helps enrollees pay their premiums. The second is called “cost-sharing reductions.” These subsidies shrink poor people’s out-of-pocket spending — for example, the copays and deductibles that apply when they fifill a prescription or see their doctor.

Here’s how that second subsidy works.

The law says that to participate in the exchange marketplaces, insurers have to offffffffffffer lower-income people a special deal: They can buy silver- level plans but still get closer to gold- or platinum-level coverage.

About half of enrollees in the exchanges benefifit from these subsidies, and their savings can be huge. For those making below 150 percent of the poverty line, combined medical and prescription drug deductibles are reduced by $3,354 on average, according to a Kaiser Family Foundation study.

Every month, the government reimburses insurers for the costs required. But the Trump administration has lately been cagey about how long this will continue.

In a Sunday-morning tweet from Trump suggested the end was nigh.

If in fact the subsidies disappear — or even if their funding just remains in doubt for long enough to cause insurers to panic — both bleeding-heart liberals and fifiscal conservatives should worry because a) poor people would lose access to health care; and (b) perhaps counterintuitively, the government would have to spend even more money on health insurance. Let’s start with (b). Even if the government reimbursements ended, insurers would still be required by law to continue guaranteeing poor people reduced out-ofpocket spending on silver plans. Where would they get the money? Most likely by raising premiums on these same silver plans — by about 20 percent, according to the Kaiser Family Foundation.

And that’s where things really go awry.

If premiums increase for the benchmark silver plan, then the size of tax credits for everyone eligible also increases.

As a result, the government would be on the hook for about $12.3 bil- lion, outweighing the $10 billion it would save by killing out-of-pocketspending subsidies.

The other way insurers might deal is just to exit the marketplaces. Anthem and Molina have both threatened to do so.

A wave of departures, as well as the general chaos likely to result from sharp premium hikes, would result in more hardship and less coverage for poor and middle-class Americans. A broad, bipartisan alliance of insurers, health providers, anti-poverty advocates, the Chamber of Commerce, the National Governors Association and state insurance commissioners have all argued as much.

So has Trump himself. Even some House Republicans are calling for these subsidies to continue.

If Trump doesn’t commit to these subsidies, expect an individual- market meltdown — for which Trump will take the blame.

Hey, nobody knew messing up health care could be so complicated.