February 22, 2018

CBO: Here's what would happen if Trump ends critical Obamacare payments

18 August 2017, 01:09 | Rex Hubbard

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The Senate Health, Education, Labour, and Pensions committee plans to consider a bipartisan bill when it returns after the August recess that would, in part, fund the CSRs for two years.

The decision to continue the subsidies "helps 18 million Americans who. don't get insurance from the government or on the job", Alexander said in a statement.

In California, more than half of the 1.4 million residents who buy health insurance on the state exchange, Covered California, make use of the cost-sharing subsidies.

The payments have become a central point of contention between the health law's proponents and the Trump administration, which has repeatedly signaled it may end the payments, which President Trump considers a "bailout" for insurance companies.

Though there have been signs that Obamacare is stabilizing, the Republican drive to dismantle the health care law has left insurers very jittery. The uncertainty has prompted many carriers to request big premium hikes for 2018 and others to downsize or exit the market.

The CSRs, worth about $7 billion this year, compensate insurers for offering qualified low- and moderate-income Obamacare customers discounts in their their out-of-pocket health costs, including co-payments and deductibles.

How is it possible that not paying a subsidy would cost the government money?

Since early this year, the administration has refused to commit to continue sending the checks. But if cost-sharing reductions were discontinued, the premium tax credit would grow to $11,800.

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"The CBO analysis makes clear that ending cost-sharing subsidies would be a flawless example of cutting off your nose to spite your face", says Larry Levitt, a vice president at the Kaiser Family Foundation. Republicans went to court in 2014 to challenge them, saying Congress had never appropriated money for them. A federal district judge in Washington agreed past year. Either the administration has an affirmative duty to make the payments, or it has an affirmative duty not to make them.

Democrats pounced on the report as a reason to keep the subsidies in place. 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 report from the nonpartisan budget office said that cutting off the payments would have paradoxical effect of increasing federal spending. Most, however, would raise premiums, the budget office projected.

President Trump said he would pull Obamacare's cost-sharing subsidies, a decision that, according to a CBO analysis, would cause an increase of 20 percent in the next year, and in the course of 10 years, increase the deficit by $194 billion.

The higher prices could push consumers out of individual insurance markets, making the markets less attractive to insurers as well.

But it's the federal government that would swallow the costs of the higher premiums for many Americans.

"There is still time to address these issues and we urge the federal government to act immediately to lower health insurance premiums in New Jersey", McArdle said.

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