The Unintended Consequences of Ending Insurer 'Bailouts'

Bryan Strickland
August 18, 2017

The Congressional Budget Office reported this week that premiums for a popular type of individual health care plan under the Patient Protection and Affordable Care Act would rise sharply and that more people would be left without options for coverage if Trump made good on his threat to stop the payments. The Congressional Budget Office estimates the payments this year would be about $7 billion.

Without the payments, insurers have said they may drop out of the Affordable Care Act's exchanges or substantially raise premiums. Although less money would be spent on the payments to insurers, the government would be required to spend even more money to offset the increase in premiums, the CBO said. The CBO estimates that eliminating the subsidy, known as cost sharing reduction payments, would ultimately cost the government $194 billion over the 10 years beginning in 2017.

"Obamacare is hurting more people than it is helping, forcing Americans to buy insurance they don't like, don't need, and can not afford", he said in a statement. But the money is under a legal cloud because of a dispute over whether the Obama-era law properly authorized the payments.

Although many of Trump's advisers oppose the payments, the budget office report Tuesday put them in a hard position.

Premiums would increase more than originally projected: Premiums for 2018 would increase by 20% over the CBO's current baseline and by 25% over the 2020 projection. However, people above 200 percent of the poverty level are eligible for subsidies that get smaller as their incomes increase.

The uncertainty over the repeal of the Affordable Care Act has already prompted Horizon Blue Cross Blue Shield of New Jersey the state's largest insurer, to request double-digit rate hikes, averaging 22 percent next year, according to its preliminary rate request. 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.

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Trump has said he may end the reimbursements, which he calls "bailouts", and has been leaving insurers to wonder month to month about whether they will receive a check.

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

But reports this year suggest insurance profits are up and markets are stabilizing.

In a statement Wednesday, the chairman of the Senate Health, Education, Labor and Pensions Committee, Sen. Patty Murray (D-Wash.) are working on a bipartisan bill that will appropriate the funds. The report found that 5 percent of Americans would live in areas where health care plans would be unavailable, as well.

"Try to wriggle out of his responsibilities as he might, the CBO report makes clear that if President Trump refuses to make these payments, he will be responsible for American families paying more for less care", the Senate Democratic leader, Chuck Schumer of NY, said.

"As I said from the beginning, let Obamacare implode", he tweeted at the time.

President Trump has sometimes falsely described the payments as a bailout to insurance companies.

Other reports by GlobalViralNews

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