Trump healthcare subsidy cut would raise premiums by 20%, CBO says
Cut that Trump has threatened for months would increase deficit by $194bn by 2026, says nonpartisan Congressional Budget Office
Consumers would pay 20% more for some of the country’s most popular health insurance plans if Donald Trump followed through on a threat to cut subsidies to insurers, according to a new analysis by the nonpartisan Congressional Budget Office.
The CBO projection, which was released on Tuesday, also estimated that terminating the subsidy payments would increase the federal deficit by $194bn by 2026. The payments reimburse insurance companies for covering some low-income enrollees.
For months, Trump has dangled the possibility that he may stop the payments, which he calls “bailouts for insurance companies”, as a tactic to force Democrats to the negotiating table. On Twitter he wrote, “Let Obamacare implode, then deal.”
A Republican plan to eviscerate Barack Obama’s healthcare law collapsed in the Senate last month, falling just one vote short of passage. Trump, who remains frustrated by the failure to deliver on one of his biggest campaign promises, has continued the payments each month. But the uncertainty has made it difficult for the insurance companies, which must set their rates for 2018 within the next few weeks.
The CBO analysis assumes that the Trump administration will make a decision by 31 August to stop the payments at the end of the year. If the president followed that timeline, the budget office estimates that premiums for “silver” plans under the Affordable Care Act (ACA) would rise. Other costs to the federal government would increase with rising premiums, the agency said.
The CBO said it expected insurance companies to withdraw from the individual insurance market because of “substantial uncertainty about the effects of the policy on average health care costs for people purchasing plans”.
“In the agencies’ estimation, under the policy, about 5% of people live in areas that would have no insurers in the nongroup market in 2018,” the budget office said.
Democrats seized on the report as proof that Trump was “sabotaging” the ACA markets.
“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 minority leader, Chuck Schumer, said in a statement. “He’s the president and the ball is his court – American families await his action.”
A chorus of consumer groups, businesses, insurers and medical organizations have urged the president to continue making the subsidy payments amid concern that stopping them would destabilize the insurance markets. And on Capitol Hill, congressional Republicans called on the White House to maintain the “cost-sharing” payments while they work on bipartisan legislation that would secure long term funding for the subsidies.
