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CBO: Deficit would spike, premiums would rise if Trump ends Obamacare subsidies

18 August 2017

New York's rate announcement came as the Congressional Budget Office reported that premiums for standard plans would rise about 20% and about 1 million people would be left without insurance if President Trump makes good on his threat to stop cost-sharing payments to insurers.

Insurers have warned that without CSRs, they would likely have to dramatically raise premiums for 2018, well above their current planned increases.

Most policyholders wouldn't feel the pain because higher subsides would cover the increase premiums. The premium for the benchmark silver plan, now $3,050, would rise to $15,300 for a 64-year-old making $34,100 a year, the CBO said.

The CBO also estimated that cutting off the payments would add $194 billion to federal deficits over a decade. The so-called cost-sharing subsidies total about $7 billion this year and are considered vital to guarantee stability for consumers who buy their own individual health insurance policies.

Premiums for the mid-range Silver plans sold through the exchanges would jump by 20 percent immediately, and 25 percent in the longer term.

"Decisions about offering and purchasing health insurance depend on the stability of the health insurance market-that is, on the proportion of people living in areas with participating insurers and on the likelihood of premiums' not rising in an unsustainable spiral", the CBO said. Health plans might decide to bolt the Obamacare markets altogether if the payments go away.

The subsidies are now the subject of litigation.

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For months, Trump has been raising the prospect of terminating payments as a way to trigger a crisis and get Democrats to negotiate on a health care bill.

The agency expected most states would allow insurers to concentrate premium increases in silver plans, not bronze or gold, so nearly all people who do not qualify for subsidies would avoid silver plans.

"I think the government - Congress and administration, has treated [insurance companies] shamefully", Timothy Jost, emeritus professor at Washington and Lee University School of Law, told ThinkProgress. It would not cause a lot of people to lose insurance, the CBO calculates; it would instead mean the government would have to pay more in tax credits as more people would qualify for direct subsidies or people whose insurance is already subsidized would qualify for larger benefits.

But it then says the agency intends to change the ACA's risk adjustment program to compensate for the loss of cost-sharing payments.

Trump has continued to make the payments, despite a pending federal lawsuit Republican House leaders filed to question the legality of the assistance.

Several big-name hedge fund investors trimmed their stakes in healthcare companies in the second quarter as the sector led the broad USA stock market higher, rallying amid a Republican effort to repeal and replace President Obama's signature healthcare law.

In a statement Wednesday, the chairman of the Senate Health, Education, Labor and Pensions Committee, Sen.

CBO: Deficit would spike, premiums would rise if Trump ends Obamacare subsidies