CBO: Deficit would spike, premiums would rise if Trump ends Obamacare subsidies

Trump healthcare subsidy cut would raise premiums by 20%, CBO says

Trump could drop the appeal, which could halt the payments.

The insurance subsidies are the subject of an ongoing legal battle, after Republicans said they were illegal and successfully sued in 2014 to block them.

Trump has repeatedly threatened to withhold the payments, called cost-sharing reductions, which amount to about $7 billion in 2017 and help cover out-of-pocket medical expenses for low-income Americans.

According to the new analysis by the Congressional Budget Office, ending the cost-sharing subsidies would likely backfire badly for the administration, costing the federal government $194 billion over a decade without fatally undermining Obamacare's exchanges. President Obama's administration argued that the payments were lawful regardless of Congress's refusal to appropriate funds, and the issue is still tied up in the courts.

In 2014, House Republicans accused former President Obama of illegally funding the subsidies without the approval of Congress, filing an ongoing lawsuit. A Politico story in January noted that the Trump administration reduced television advertising by about $800,000 per day for the last four days of open enrollment-a few million dollars.

The effect Trump would be hoping for if CSRs are stopped is a death spiral in the ACA exchange marketplace.

"If ObamaCare is hurting people, & it is, why shouldn't it hurt the insurance companies & why should Congress not be paying what public pays?" However, previous year a federal judge ruled that the payments were illegal, because Congress had never properly appropriated funding for them. "How can any company in any sector trust the United States after seeing health insurers treated so shabbily?"

Insurers, however, want more than just another month's payments.

The payments have always been an issue, particularly for House Republicans who sued the Obama administration over them, casting the payments as unlawful. Further, Republicans are reportedly planning to move on from health care to tax reform when they return from recess.

In a quirk of the ACA, the CRS subsidies have to be regularly renewed.

Without the insurance payments, gross premiums for silver plans would rise 20 percent in 2018 and 25 percent higher by 2020, according to the CBO. Insurance companies would need to raise premiums to offset the lack of CSR payments. "The costs of health care that continue to go unchecked - including spending on prescription drugs that grows faster than any other health care service and continued consolidations in the hospital sector - are compounded by the problem of growing health care taxes". Its next installment is due August 21. Given how legislation gets made in Washington, I wouldn't be surprised to see some elements of the repeal and replace bill surface again, possibly tacked onto what's known as must-have legislation. Lamar Alexander (R-Tenn.), chairman of the Senate Health, Education, Labor, & Pensions (HELP) Committee, said in a statement Wednesday. The panel will begin hearings on stabilizing the marketplace the first week of September.

State officials noted that changes in the way some federal tax credits are allocated could reduce year-over-year costs for some consumers, especially those who purchase plans on the exchange's popular "Silver Level" of options.

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