Trump administration agrees to continue healthcare subsidy for now

Gage Skidmore  Foter

Gage Skidmore Foter

The CBO has released a new report and found that if President Trump stopped paying the cost-sharing reductions, premiums would shoot up 20 percent next year alone and increase the federal deficit by close to $200 billion over the next decade. Trump's plot to critically sabotage the Affordable Care Act could actually lower the uninsured rate, while blowing almost $200 billion. This is because Obamacare's subsidies are pegged to the cost of a silver plan in an area, meaning people who are eligible for federal help would be insulated from the premium hike.

The president has repeatedly said he might end the payments, known as cost-sharing reduction (CSR) payments, which are now slated to cost the government $7 billion during this fiscal year and $10 billion in 2018.

Taxpayers would be stuck with the tab - estimated at $194 billion over the next 10 years.

The report says that assuming continued enforcement of the individual mandate and no change to the medical loss ratio, "are anticipated to cause sufficient demand for insurance by enough people, including people with low healthcare expenditures, for the market to be stable in most areas as the ACA is now being implemented".

The cost-sharing reduction payments go directly to insurers to reimburse them for reducing deductibles and co-pays for lower income enrollees. And those richer subsidies would attract some more individuals to insurance markets, reducing the number of uninsured by about one million. Or, in lieu of that, congressional action to ensure the payments are made. Others support the payments, which are meant to subsidize costs for insurers who offer plans with fewer out-of-pocket costs for low-income consumers.

Democrats seized on the report as proof that Trump was "sabotaging" the ACA markets.

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President Trump had periodically threatened to stop the payments as a way to highlight what he said were the ACA's defects, and to pressure Congress into passing ACA repeal legislation. That case became more complicated earlier this month when a USA appeals court allowed Democratic state attorneys general to defend the payments and have a say in the legal fight.

The Trump administration took over the lawsuit and has so far delayed deciding whether to continue the Obama administration's appeal or terminate the subsidies.

Senate Health Committee Chairman Lamar Alexander, Tennessee Republican, praised the administration's decision to keep the money flowing for now.

The agency expected most states would allow insurers to concentrate premium increases in silver plans, not bronze or gold, so nearly all people who do not qualify for subsidies would avoid silver plans.

"Such estimates are inherently imprecise because the ways in which federal agencies, states, insurers, employers, individuals, doctors, hospitals and other affected parties would respond to the changes made by this policy are all hard to predict", the CBO report states.

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