President Trump just moved unilaterally to raise the cost of insurance for people who rely on Obamacare’s private insurance exchanges by 20% virtually overnight.
Trump’s move to slash the “cost sharing” payments that Democrats passed in 2010 in the Affordable Care Act will raise premiums by 20% according to the non-partisan Congressional Budget Office (CBO) report, which is embedded below. Republicans stand to take the blame when Americans get their new, higher health insurance bills next year.
Tonight’s news means that private insurance companies, dozens of which are already suing the federal government because Republicans are withholding Obamacare “risk corridors” payments, will likely file suit over cost-sharing payments as well. Politico reports:
President Donald Trump plans to cut subsidy payments to insurers in his most aggressive move yet to undermine Obamacare after months of unsuccessful repeal efforts on Capitol Hill, according to two sources.
The subsidies, which are worth an estimated $7 billion this year and are paid out in monthly installments, may stop almost immediately since Congress hasn’t appropriated funding for the program.
The Trump administration will also likely drop an appeal of a lawsuit contesting the legality of the payments, known as cost-sharing reductions. However, a group of Democratic state attorneys general will continue fighting in court to preserve the payments.
There are several different programs in Obamacare meant to control the cost of premiums as health insurers transitioned from rationing coverage to accepting all people who need insurance, regardless of pre-existing conditions.
The CBO explains here why “cost sharing” is one of the most important programs to ensure consumers pay lower out of pocket costs. Obamacare requires insurers to offer more affordable coverage based on income, in exchange for these federal payments:
The Affordable Care Act (ACA) requires insurers to offer plans with reduced deductibles, copayments, and other means of cost sharing to some of the people who purchase plans through the marketplaces established by that legislation. The size of those reductions depends on those people’s income. In turn, insurers receive federal payments arranged by the Secretary of Health and Human Services to cover the costs they incur because of that requirement.
Since Obamacare requires insurers to offer more affordable coverage based on income, in exchange the “cost sharing” program protects patients on a budget from being unable to pay for doctors and medicines, even when they can afford to pay their monthly premiums.
A majority of Americans want the federal government to make Obamacare work, including most of Republicans according to the latest polling this summer.
President Trump’s malicious move tonight – slashing the payments that Congress promised specifically to help middle-class people afford health insurance – is going to grab millions of Americans by the wallet.
Because health insurance is a necessity (and a human right), people will have to pay any rate increases.
Trump’s decision will effectively function like a massive tax increase on the middle class and self-employed people who rely on Obamacare for insurance.
Congress produced this non-partisan report about “cost sharing” payment reductions: