Stop to subsidies criticized
Trump’s action called “cruel” by Hickenlooper
A Trump administration decision to discontinue cost-reducing payments to health insurers that are a key part of the Affordable Care Act drew condemnation Friday from Colorado officials and national health care groups.
Gov. John Hickenlooper called the subsidy decision “cruel and irresponsible.” The attorneys general in nearly 20 states — Colorado is not one of them — said they plan to sue over the decision. Six physician groups, representing more than 560,000 U.S. doctors and medical students, issued a statement warning that cutting off the payments will cause “dramatic, if not catastrophic, increases in premiums across the country.”
The announcement also brought immediate upheaval to Colorado’s insurance market. As a result of the subsidy payments being discontinued, the Colorado Division of Insurance announced that premiums for people who buy health insurance on their own will rise next year on average by an additional 6 percentage points above previously announced increases.
The bump means that the average increase for premiums in the individual market for 2018 in Colorado will now be nearly 33 percent over 2017 rates. The Congressional Budget Office has previously estimated that ending the payments could raise premiums
nationwide by 20 percent compared to if the current law remained in place.
“Hundreds of thousands of Coloradans will see their premiums increase even more,” Hickenlooper said in a statement. “It threatens coverage for Coloradans with chronic diseases or disabilities, potentially putting health care out of reach for those who need it the most.”
The Trump administration announced late Thursday that it will discontinue paying the subsidies, which are known as “cost-sharing reductions” or CSRs. In an early-morning tweet Friday, President Donald Trump tied the decision to his ongoing campaign to repeal former President Barack Obama’s signature health care law.
“The Democrats ObamaCare is imploding,” Trump wrote. “Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”
“ObamaCare is a broken mess,” Trump wrote in another tweet later in the morning. “Piece by piece we will now begin the process of giving America the great HealthCare it deserves!”
Under the Affordable Care Act, health insurers are required to help low-income customers cover deductibles and copays, the back-end costs of health insurance. This help is only available to the lowest earners among people who buy health insurance on their own — as opposed to getting it through an employer or the government. These subsidies are also separate from the more widely used tax credits that help people pay for premiums, the front-end costs of insurance.
Hickenlooper said 45,000 people in Colorado currently benefit from the subsidies. Data from the Kaiser Family Foundation earlier this year put the number at about 33,000. Nationally, about 6 million people benefit from the cost-sharing reductions.
The Obama administration reimbursed insurers for providing this help, even though Republicans in the U.S. House of Representatives sued to stop it from doing so by arguing that the money hadn’t been properly appropriated. The lawsuit is pending on appeal, after a trial court judge ruled in favor of Republicans.
The Trump administration had continued the payments, though Trump repeatedly threatened to stop them. The Congressional Budget Office has estimated that reimbursing the CSRs would have cost the federal government $7 billion this year.
In a Friday morning appearance on the show “Fox and Friends,” U.S. Attorney General Jeff Sessions said the Justice Department concluded that Trump could not legally continue to make the payments.
“The appropriation must come from Congress,” he said. “The president cannot do it.”
Trump’s decision does not impact the Affordable Care Act’s tax credits for premiums. It also doesn’t change the requirement for insurers to help with deductibles — it just means they won’t be reimbursed for doing so. As a result, insurers say they will have to make up the cost by raising premiums for everyone.
Because of long-standing doubts that Trump would continue the payments, state insurance officials allowed carriers to file two sets of proposed 2018 rates for review earlier this year. One assumed the subsidies would be paid and one assumed they wouldn’t be.
When the Division of Insurance announced the approved 2018 rates last month — with an average increase of 27 percent — those rates assumed that the subsidies would be paid. Now that Trump has announced he will not pay the subsidies, the Division of Insurance will switch to the other rates — which average an additional 6 percentage points for all carriers, but could be as high as an additional 14 percentage points for some, the division has previously announced.
No insurer is expected to leave the Colorado market for 2018 as a result of the subsidy decision.
“It doesn’t help people and will actually hurt consumers,” Colorado Insurance commissioner Marguerite Salazar said in a statement Friday. “However, we knew this could happen and we were prepared with a contingency plan.”
The federal tax credits will blunt some of the premium increases, but only for people who receive the credits. About 35 percent of people in the individual market in Colorado make too much money to qualify for a credit, meaning they would have to bear the full costs of the increase. To be eligible for a tax credit, a single individual must make less than $47,521 per year, while a family of four must have an income below $97,201.
The rising amount the government pays in tax credits, meanwhile, means that ending the subsidies will cost the federal government more than it saves. The Congressional Budget Office estimated in August that ending the subsidies then would swell the federal deficit by $6 billion in 2018 and by a total of $194 billion over the first decade.
In his statement, Hickenlooper called on Congress to step in and pass a bill to pay the subsidies, if the White House won’t.
“Governors are willing to work with Congress to stabilize our health insurance markets,” Hickenlooper said, “but to undermine the individual market is cruelty without benefit.” The Associated Press contributed to this report.