Congressional Budget Office: Premiums would jump 20% if Trump payments cut

Posted August 16, 2017

The federal deficit would increase $6 billion in 2018, $21 billion in 2020 and $26 billion in 2026, it said. That head-scratching outcome is because a different Affordable Care Act subsidy would automatically increase as premiums jump, more than wiping out any savings.

"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.

Insurers have been pleading for certainty from the administration on whether they'll continue to receive the payments, which total about $7 billion for fiscal 2017.

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. It has been unclear when or if the White House will make a decision about the payments to provide that reassurance.

The CBO study - conducted at the request of House Democratic Leader Nancy Pelosi - showed that in addition to the 20% premium hike by 2018, premiums would rise by 25% by 2020. The higher tax credits would, in turn, make the marketplace plans more attractive for some lower-income Americans who have not been customers.

That would leave about five per cent of Americans with no options for health insurance on Obamacare exchanges, places where the pool would be too small for insurers to justify costs. Rural communities are at greater risk.

While the CBO predicts that 1 million Americans would lose insurance in the short term, it says there could be 1 million fewer Americans uninsured by 2020. Different timing would produce different outcomes, but CBO staff said the results would be less destabilizing for the marketplaces if a decision is announced before insurers set their rates by September 5.

Some key GOP lawmakers have backed continuing the subsidies through at least next year to keep insurers from raising rates or exiting the exchanges.

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"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. Patty Murray of Washington, plan bipartisan hearings.

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

The ACA requires insurers to offer plans with reduced deductibles, copayments, and other means of cost sharing to some of the people who purchase plans through the marketplaces established by the legislation. Either the administration has an affirmative duty to make the payments, or it has an affirmative duty not to make them.

Trump has considered cutting off payments and let Obamacare implode as a way to come to a deal on repeal and replace.

Trump elaborated in another tweet, "If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies.will end very soon!"

How is it possible that not paying a subsidy would cost the government money? And the government would wind up wasting a lot of money on a less efficiently policy.

Dropping the subsidies has been a recurring theme within the Trump administration as it tries to get Congress to repeal the ACA. The case is pending before the United States Court of Appeals for the District of Columbia Circuit.