CBO projects termination of insurance subsidies will increase premiums by double digits

If President Donald Trump follows through on his threat to terminate Obamacare cost-sharing payments to insurance companies, millions of Americans would see double-digit increases in their premiums as early as next year, according to the latest projections released by the non-partisan Congressional Budget Office.

Following three unsuccessful votes to repeal the Affordable Care Act in the Senate last month, Trump threatened to halt cost-sharing reduction payments – also known as CSRs – to insurance companies participating in the health care exchanges, which were set up to allow individuals, who do not receive health coverage through their work and earn too much to qualify for Medicaid, to buy affordable health insurance.

“If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!” Trump wrote on Twitter on July 29th.

What Trump branded as “bailouts for insurance companies” is in fact the CSRs that have enabled insurers to offer health plans with reduced deductibles and copayments for middle-class Americans through the Obamacare market exchanges.

Under current law, the Department of Health and Human Services is expected to continue to make cost-sharing reduction payments to insurers through the end of this year.

While the long-term fate of the CSR remains uncertain, the CBO’s report released yesterday outlined the severe consequences of following through on Trump’s threat.

If the Trump administration ceases the CSR payments, insurers would raise premiums to cover their costs. According to the CBO, the average premium would rise by “20%” in 2018 and by “25%” in 2020.

Furthermore, more insurers would withdraw from the exchanges around the country. Currently, “fewer than 0.5% of people live in areas of the country” where no insurers participate in the exchanges. But the number of people left without choices in their local exchanges would grow to 5% – a 10-fold increase – if the CSR payments are terminated. As a result, one million more Americans will be uninsured in 2018.

The CBO projections showed that middle-class individuals between the ages of 21 and 40 would face the highest increases in health premiums if the Trump administration eliminates CSR payments.

CBO projects that premiums will increase by:
Nearly 9% for individuals earning $18,900 a year;
Nearly 10% for individuals earning $34,000 a year;
Nearly 10% for individuals earning $56,800 a year who are 64-years-old;
Nearly 14% for individuals earning $56,800 a year who are 40-years-old;
About 25.5% for individuals earning $56,800 a year who are 21-years-old;
About 25.5% for individuals earning $68,200 a year who are 21 or 64-years-old;
And 26% for individuals earning $68,200 a year who are 40-years-old.

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