White House ending ACA subsidies to insurers

Written on Oct 20, 2017

The White House announced late Oct. 12 that it would no longer reimburse insurers for lowering costs for customers under the Affordable Care Act.

President Trump had indicated he was considering cutting off the payments in order to increase pressure on lawmakers to repeal the ACA.

"Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare," the White House said in a statement.

"In light of this analysis, the Government cannot lawfully make the cost-sharing reduction payments,” the White House statement said.

The Congressional Budget Office (CBO) has said that in the short term, health care premiums would spike, insurers would exit the market and deficits would increase if Trump followed through with his threat.

Insurers have already submitted their premiums for 2018 and in many cases raised rates on the assumption that CSRs would be cut off. That could somewhat blunt the impact of the White House's move.

Democrats and Republicans in the House and Senate have discussed appropriating the CSR payments themselves, which would negate the impact of Trump's order. But it's not yet clear GOP leaders would support a bill, which is likely to draw fierce conservative opposition.

The move comes the same day that Trump signed an executive order that could undermine the health care law that was President Barack Obama's signature legacy.

Open enrollment in Affordable Care Act plans for 2018 begins on Nov. 1.

In August, the CBO reported that ending the payments would raise the number of uninsured Americans by about 1 million in 2018 but would then start lowering the number of uninsured by about 1 million a year starting in 2020.

The federal budget deficit would rise by $6 billion next year, $21 billion in 2020 and $26 billion in 2026 as low- and moderate-income Americans make more use of tax credits to offset rising premiums, it said.

The CBO said it expected that insurers in some states would withdraw from or not enter some markets because of "substantial uncertainty." But it projected that by 2020, "more insurers would participate, so people in almost all areas would be able to buy nongroup insurance."

The CBO also said most people would pay net premiums for nongroup insurance similar to or less than what they would have paid otherwise over the next decade, after taking premium tax credits into account.

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