CBO: Ending cost-sharing reduction payments will increase premiums, federal deficit


The administration's stance, coupled with its similar refusal to commit to key Obamacare subsidies to insurers through next year, could result in fewer people signing up for health coverage in the individual insurance plans for 2018 after open enrollment starts in November.

As CNBC reports, Trump has repeatedly threatened to end the billions of dollars in payments to insurance companies that sell individual health plans under the Affordable Care Act.

Insurers are citing increasing uncertainty in regards to Obamacare's cost-sharing reduction payments and whether or not the Trump administration will continue to fund them. These payments are made to health insurers to help low-income people enrolled under the health care law with out-of-pocket expenses.

The Congressional Budget Office (CBO) suggested that the payments for this year will total $7 billion.

And cutting funding might not even save the government money - the CBO says the federal deficit would increase by $194 billion over the next 10 years, as more people become eligible for more expensive tax credits.

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"The CBO analysis makes clear that ending cost-sharing subsidies would be a ideal example of cutting off your nose to spite your face", says Larry Levitt, a vice president at the Kaiser Family Foundation.

"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".

Furthermore, the report said, insurers in some states might simply decide to withdraw from the market due to "substantial uncertainty" about how subsidy cuts might affect their bottom line. Several insurers have already said that without those payments, their rates will see double-digit increases by next year.

"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. Following the Republican party's failure to pass a bill repealing the healthcare law, Trump has said he may end the payments in order to allow the ACA to collapse.

The payments are the subject of an ongoing lawsuit by House Republican, who argue the law did not explicitly authorize the Obama administration to make the payments.