Government Share of ACA Premium Hikes Adds $194 Billion to Federal Deficit

Toni Houston
August 18, 2017

The Trump administration confirmed Wednesday it will make critical Obamacare payments to insurers for August - one day after congressional scorekeepers outlined the long-term risks of cutting off the contested reimbursements. Those are payments the federal government makes to insurance companies to reimburse them for the discounts on copays and deductibles that they're required by law to give to low-income customers. Those threats continue, though the Trump administration has paid the subsidies each month.

The cancellation of subsidies could lead some insurers to withdraw from the program, potentially leaving 5 percent of Americans living in areas with no insurance options for 2018 - although within two years, CBO said, insurers should be able to adjust to the change.

Trump has grown increasingly frustrated as Republicans, who control the White House, Senate and House, have been unable to pass a repeal or replacement of the Affordable Care Act, former Democratic President Barack Obama's signature domestic policy achievement.

"As I said from the beginning, let ObamaCare implode, then deal", Trump tweeted out. Trump could drop the appeal, which could halt the payments. Her premium tax credit would also increase from $3,450 to $4,850, so her net premium cost would go up from $3,050 to $3,350.

The full CBO/JCT report is available at the CBO website.

He posted on Twitter on July 29, saying "If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!"

"The average amount of subsidy per person would be greater, and more people would receive subsidies in most years", the analysis said.

Anthem Inc, one of the largest remaining Obamacare insurers, earlier this month scaled back its offerings in Nevada and Georgia and blamed the moves in part on uncertainty over the payments. And despite all the kvetching about "saving" Obamacare or refusing to subsidize insurance companies, killing CSR payments would be purely destructive to market stability.

President Trump has suggested he would suspend the payments to speed Obamacare's demise, while other times he's signaled he would hold the payments hostage to try to force Democrats to the table to renegotiate President Obama's signature health law.

Last year, a federal judge sided with House Republicans, ruling although the payment had been authorized under the law, it had not been appropriated.

The subsidies are now the subject of litigation.

"The Trump administration has sent strong signals about its intent to reduce or even eliminate enforcement of the individual mandate", Pallone, the top Democrat on the House Energy and Commerce Committee, and Rep. Richard Neal (D-Mass.) wrote to General Accounting Office.

Thus, for example, a 40-year-old with income of $34,000 would pay about $3,350 a year - after tax credits - for a "silver plan" in 2026, but could get a more generous gold plan for several hundred dollars less, the budget office said.

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