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

Either the administration has an affirmative duty to make the payments, or it has an affirmative duty not to make them.

While less than one-half of a percent of people are now without marketplace insurers in their area, that number would go up to five percent in 2018, with one million people losing their insurance.

Health care premiums will spike, insurers will exit the market, and deficits will increase if President Donald Trump follows through on his threats to cut off government payments to insurance companies, according to a new Congressional Budget Office report. On top of that, the federal deficit would increase by $194 billion through 2026.

The Trump White House has considered stop funding CSRs on numerous occasions, but it has been making payments on a month-to-month basis in the face of an impending lawsuit filed in 2014.

The CBO’s assessment echoes concerns raised by insurers over the past several months, who have said that terminating the payments would cause premiums to rise.

Covered California is referring the to the plan as an initiative to address market uncertainty over the actions that might be taken by the Trump administration and the courts. The threats haven’t stopped, but the administration has continued to pay the subsidies. Trump has not announced whether the executive branch would withhold the subsidies, which in essence, would be tantamount to a massive tax increase for millions of financially struggling households. However, the premiums that they and the government pay together are the same as others in the silver tier, so those premiums do not pay for the more generous benefits. The industry’s biggest Obamacare victor has been America’s largest health insurer, United Healthcare. The question still rings true.

Timothy Jost, a professor emeritus of health care law at Washington and Lee University School of Law, says that picture may be a bit too rosy.

The CBO found that if the government stops paying insurers the CSRs, then they will raise rates to make up for the difference. These payments were essentially an agreement reached under the ACA.

Not one of these industry sectors said during 2017’s health care debate that they would be willing to moderate their anticipated profits. And despite all the kvetching about “saving” Obamacare or refusing to subsidize insurance companies, killing CSR payments would be purely destructive to market stability. 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. Insurance industry groups have said they have seen no sign that payments due at the end of August will be halted.

In this system the government provides payments to insurance companies and they pass on the “savings” to customers. Lamar Alexander (R-Tenn.), chairman of the Senate Health, Education, Labor, & Pensions (HELP) Committee, said in a statement Wednesday. Is it really about policy, or is it just crass politics?