CBO: Withholding ACA Subsidies Would Send Premiums Soaring

18 August, 2017, 01:11 | Author: Kelly Sanders
  • CBO: Withholding ACA Subsidies Would Send Premiums Soaring

The federal deficit would swell and premiums for some health plans would rise sharply if the Trump administration makes good on a threat to cut off subsidies for low- and medium-income buyers of health insurance, the Congressional Budget Office said Tuesday.

Most policyholders wouldn't feel the pain because higher subsides would cover the increase premiums. "If they treated Defense, or Medicare providers, or Medicare Advantage Plans providers the way they have treated insurers under the ACA, they would shut down". Because of the automatic subsidy alluded to above that would kick in should premiums rise many low-income individuals would receive a different subsidy in lieu of the one that they're now receiving if they're receiving a subsidy from the online exchanges presently. But the subsidies would increase the federal deficit by $194 billion over 10 years, the CBO said. The so-called cost-sharing subsidies total about $7 billion this year and are considered vital to guarantee stability for consumers who buy their own individual health insurance policies.

The subsidies make Obamacare plans more affordable for low-income people - something insurers depend upon.

According to Sally Pipes, president of the Pacific Research Institute, Republicans should not let the latest CBO report derail their efforts to eliminate Obamacare's cost sharing reduction subsidies.

"Decisions about offering and purchasing health insurance depend on the stability of the health insurance market-that is, on the proportion of people living in areas with participating insurers and on the likelihood of premiums' not rising in an unsustainable spiral", the CBO said.

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If these payments ended, some insurance companies would likely withdraw from Obamacare marketplaces.

The Trump administration has been providing funds for cost-sharing subsidies month-to-month, with no commitment to pay for the remainder of this year, much less for 2018.

The CBO study states under the header, "Effects on Health Insurance Coverage", that "the number of people uninsured under this policy would be about 1 million higher than under the baseline in 2018 but about 1 million lower in each year starting in 2020". Adding to the confusion, other parts of the law clearly direct the government to reimburse the carriers. The government pays a share of some enrollees premiums by way of tax credits.

Though there have been signs that Obamacare is stabilizing, the Republican drive to dismantle the health care law has left insurers very jittery. "As the nonpartisan CBO and Kaiser Family Foundation concluded in recent reports, just the threat of not making these payments has caused insurers to jack up prices next year and has injected uncertainty into the market for consumers and insurers alike".

The budget office study was requested by the House Democratic leader, Nancy Pelosi of California, and the House Democratic whip, Steny H. Hoyer of Maryland. "Congress owes struggling Americans who buy their insurance in the individual market a breakthrough in the health-care stalemate", Alexander said.

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