Trump doubles down on Obamacare, Iran deal

Ending insurance subsidies could hurt middle class most

The federal government will still be covering the cost of higher premiums for millions of lower-income people after President Trump’s decision late Thursday to stop paying subsidies that cover consumers’ out-of-pocket health insurance costs.

It’s the higher-income people in some states — the very ones Trump has claimed were the victims of the Affordable Care Act (ACA) — who will be hit hardest, health policy experts say.

That’s because insurers in most states priced their plans higher to account for the loss of the subsidies and only people earning less than four times the federal poverty limit will benefit.

“The two potentially vulnerable groups here are those who are in counties where insurers may pull out as a result of this action and those not eligible for subsidies to help them pay the higher premiums,” says Larry Levitt, senior vice president of

Kaiser Family Foundation.

Rep. Tom MacArthur, a New Jersey Republican who negotiated health insurance changes earlier this year that had the backing of the conservative House Freedom Caucus, says he thinks the cost sharing subsidies should be funded through 2019, but “now we also need to bring down costs for the next group.”

In some states, including California, insurers only increased premiums on the silver level plans lower income people have to buy to get the subsidies. That lessens the impact of Trump’s decision on higher income consumers, Levitt says.

Trump’s move is widely seen as his most significant one yet to undermine the ACA, which the Republican-led Congress and Trump have so far failed to repeal and replace.

It came just hours after he signed an executive order that would give these higher-income people who buy their own insurance the option of buying cheaper and less comprehensive insurance. But that action requires federal rules, which would take several months to enact and may not take effect until the open enrollment period in November 2019.

It’s really just a different pool of federal funds that covers the higher rates. The tax credits people who earn less than $98,400 for a family of four receive to lower the cost of silver-level plans on the exchanges are pegged to the premium rates. That means as the rates rise, so do the credits, according to health policy analysts including Levitt and the Urban Institute.

The lost subsidies to insurers means the federal government would spend 18% more on premium tax credits for insurance cus- tomers than it would have spent on tax credits and cost-sharing subsidies combined, according to the Urban Institute. That would be another $7.2 billion in 2018, the Urban Institute said.

That means stopping the sub- sidies to insurers will actually cost the federal government money, not save it.

The White House said Thurs- day that its decision to stop pay- ing the subsidies was based on a Justice Department determina- tion that the payments were not appropriated by Congress. House Republicans made the same argument in 2014 when they sued the Obama administration.

Trump tweeted Friday that “Dems should call me to fix!” the imploding Obamacare. Rep. Josh Gottheimer, a New Jersey Democrat and chairman of the 40- member, bipartisan House Prob- lem Solvers Caucus, said he already had.

“We’re ready to sit down and fix health care,” Gottheimer said. “This move will singlehandedly both increase the federal deficit by $200 billion and spike premi- ums by more than 20% in New Jersey next year.”

Insurers in most states as- sumed the subsidies would not be continued when they submitted their rates for 2018.