CBO: Killing Cost-Sharing Subsidies Would Hike Silver Plan Premiums And Deficit

Trump healthcare subsidy cut would raise premiums by 20%, CBO says

The Obama administration simply paid the insurers anyway, sparking a lawsuit, and now Trump has threatened to cancel the payments as a way of encouraging Congress to pass a new health-care law. Now the law requires insurers to hold down deductibles and co-payments for people who receive coverage through the Obamacare marketplaces and whose incomes fall below a threshold of roughly two-and-a-half times the federal poverty level. To make insurers whole, the government reimburses them with what are known as cost-sharing reduction payments, totaling about $600 million a month.

Trump has dangled the possibility of cutting off CSRs in numerous tweets, calling them "bailouts" for insurers and threatening to let Obamacare "collapse".

A report conducted by the Congressional Budget Office (CBO) has estimated that insurance plans under the Affordable Care Act (ACA) would rise by 20 percent within a year if President Donald Trump refuses to keep subsidizing the health care law. But it could cause a shift in which plans are popular with marketplace customers as insurers realign some of their prices to defray the loss of the federal payments, the CBO said.

Hundreds of US counties are at risk of losing access to private health coverage in 2018 as health insurers consider pulling out of those markets in the coming months.

"Obamacare is hurting more people than it is helping, forcing Americans to buy insurance they don't like, don't need, and can not afford", he said in a statement.

The CBO found that if the government stops paying insurers the CSRs, then they will raise rates to make up for the difference.




If Trump stops payment of 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. Lamar Alexander (R-Tenn.), chairman of the Senate Health, Education, Labor, & Pensions (HELP) Committee, said in a statement Wednesday.

Trump has tried to use subsidies as a bargaining chip, first to get Democrats to the table and more recently to spur the Senate to return to its effort to repeal and replace the health care law.

If Trump cuts off the payments, "he'll be responsible for Americans paying more for less care", said Senate Democratic leader Charles S. Schumer of NY.

Jill A. Hanken, an attorney with the Virginia Poverty Law Center, stressed that five insurance companies will still offer individual plans and that Virginians will still have at least one option for buying coverage under the ACA.

The CBO cautioned that its analysis depends on how various parties would respond to an end in the cost-sharing subsidies. The Constitution says the government shall not spend money unless Congress appropriates it.

House Republicans took Mr. Obama to court in 2015, and a federal judge has ruled the payments illegal - though she stayed her ruling while the case is on appeal.

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