CBO predicts high costs if subsidies end
Trump’s threat would add $194B to federal deficit
WASHINGTON - Premiums for a popular type of individual health plan would rise sharply, and more people would be left with no insurance options if President Donald Trump makes good on his threat to stop Obamacare payments to insurers, the Congressional Budget Office said Tuesday.
The nonpartisan number crunchers also estimated that cutting off payments that now reduce copays and deductibles for people of modest incomes would add $194 billion to federal deficits over a decade.
That head-scratching outcome is because a different Affordable Care Act subsidy would automatically increase as premiums jump, more than wiping out any savings.
“Ending the payments to insurers would introduce more chaos into an unsettled market, and perversely end up costing the federal government more in the end,” said Larry Levitt of the Kaiser Family Foundation, a nonpartisan group that found similar results.
At issue are the ACA’s “cost-sharing” payments, totaling about $7 billion this year, which reimburse insurers for subsidizing out-of-pocket costs for people with modest incomes.
It’s a financial break that can cut a deductible of $3,500 down to a few hundred dollars. Nearly 3 in 5 HealthCare.gov customers qualify for costsharing help, an estimated 6 million people or more. But the money is under a legal cloud because of a dispute over whether the Obama-era law properly authorized the payments. Trump has been threatening to end the monthly payments.
The 14-page report lays out consequences if that happens, some counterintuitive:
Consumers who now qualify for tax credits to offset their monthly premiums would be largely shielded from the estimated 20% jump in the cost of a standard “silver” plan, because of the automatic increase in the ACA’s premium subsidies. But solid middleclass households who make too much to receive help with their premiums would face a big hit.
Depending on factors like their income and age, some subsidized customers would be able to take their higher premium tax credits and buy a generous “gold” level plan for about the same money, or a skimpy “bronze” plan for much less or nothing.
Some insurers would decide to exit the market rather than rejigger premiums for 2018 at the last minute. That would leave areas of the country that are home to about 16 million people with no insurers on the health care marketplace for individual policies. Rural communities are at greater risk.
About 1 million people would become uninsured right away, but within a few years that slippage would reverse and more people would be covered.
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.