April 24, 2018

Obamacare subsidy cut-off would raise insurance prices

18 August 2017, 01:11 | Franklin Nunez

Obamacare subsidy cut-off would raise insurance prices

Obamacare subsidy cut-off would raise insurance prices

Insurers have already cited uncertainty surrounding the funding as a reason for big premium increases for 2018.

But the CBO found that any premium increases will have an nearly paradoxical effect: For the most part, individuals will not pay more for health insurance, but the government will.

The government makes the insurers whole, in part, through the CSR payments.

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.

Some insurers would pull out of the Obamacare markets, but not enough to cause a collapse: According to the CBO, if Trump ended CSRs, insurers would exit some of the Obamacare exchanges due to the higher costs.

Premiums for the mid-range Silver plans sold through the exchanges would jump by 20 percent immediately, and 25 percent in the longer term. In Trump's opinion, if he stopped paying these cost-sharing reductions, Obamacare would "implode", and Democrats would have no choice but to negotiate a replacement plan.

Now that Trump is in the White House, and Republican efforts to repeal and replace the Affordable Care Act have failed, many Republicans are urging the president to continue the payments rather than undermine the health care markets.

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"Because they would still be required to bear the costs of CSRs even without payments from the government", the CBO report states, "participating insurers would raise premiums of "silver" plans to cover the costs".

If these payments ended, some insurance companies would likely withdraw from Obamacare marketplaces. The CBO outlines that should the administration fail to make these payments, low-income Americans will be forced to pay more for care that could have cost less.

Cost-sharing subsidies were put in place by Obamacare to rein in the cost of out-of-pocket expenses for lower-income individuals by reimbursing insurers.

A report by the Kaiser Family Foundation found that for people who earn between 150 percent and 200 percent of poverty "the average deductible is reduced to $809, a savings of $2,800" each year.

The budget office study was requested by the House Democratic leader, Nancy Pelosi of California, and the House Democratic whip, Steny H. Hoyer of Maryland.

The CBO estimate of the effect of ending the cost-sharing payments on premium hikes almost matches what independent nonpartisan experts previously predicted. Worries are that, after the July 28 failure of the Republican-controlled Congress to replace to repeal and replace Obamacare as Trump demanded, he could move to undermine the program by not renewing the subsidies at the end of this month. Chairman of the health committee Senator Lamar Alexander (R-TN) announced he'd start holding hearings on September 4.

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.

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