CBO: Nixing Obamacare Subsidies Will Raise Premiums And Increase The Deficit

Eliminating Obamacare Subsidies Would Up Premiums by 20 Percent CBO

The Trump administration extended the deadline to tweak its proposed premium rates for the Obamacare exchanges from August 16 to September 5.

The pressure to continue the payments increased Tuesday when the Congressional Budget Office reported that cutting off the payments would actually increase federal spending.

The Congressional Budget Office (CBO) released a new analysis Tuesday finding that premiums would rise 20% next year and the deficit would balloon by almost $200 billion over a decade if they subsidies are cut off; many insurers have already baked the payments' demise into their 2018 plan rates. But the subsidies would increase the federal deficit by $194 billion over 10 years, the CBO said.

Under Obamacare, insurers are required to provide "cost-sharing reduction" (CSR) - lower deductibles and so on - to lower-income enrollees who buy plans classified as "Silver" in quality.

The CBO, as an economic forecasting organization, treats the potential end of the health law's CSR payments primarily as a policy question, looking at the likely ripple effects on the insurance market as it exists under Obamacare.

It is unclear whether the federal government played a role in providing incentives to insurers to offer plans in bare counties, many of which were at risk because Anthem Inc, one of the largest remaining Obamacare insurers, pared back its offerings in several states, said Cox. Withholding those subsidies can not possibly lead to any result other than that.

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The cost-sharing payments have been at the center of a political battle over the Affordable Care Act since before President Trump took office.

The reports also say premiums for benchmark plans sold on the Affordable Care Act exchanges will rise about 20 percent next year and about 25 percent by 2020. This is because Obamacare's subsidies are pegged to the cost of a silver plan in an area, meaning people who are eligible for federal help would be insulated from the premium hike.

Jill A. Hanken, an attorney with the Virginia Poverty Law Center, stressed that five insurance companies will still offer individual plans and that Virginians will still have at least one option for buying coverage under the ACA.

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.

A White House spokesperson said Wednesday President Donald Trump will make key ObamaCare subsidy payments next month, while he makes a final decision about the ultimate future of the payments. An abrupt cutoff of the cost-reduction payments would be among the quickest ways to make that happen.

" Some insurers would decide to exit the market rather than re-jigger premiums for 2018 at the last minute". But it could cause a shift in which plans are popular with marketplace customers as insurers realign some of their prices to defray the loss of the federal payments, the CBO said.

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