Trump Will Continue Paying Obamacare Subsidies

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Robert Donachie Capitol Hill and Health Care Reporter
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The Trump administration will continue making Obamacare subsidy payments through August, a White House spokesman told The Daily Caller News Foundation.

The cost-sharing reductions (CSRs) help low-to-moderate income individuals purchase health insurance. The Trump White House has considered stop funding CSRs on numerous occasions, but it has been making payments on a month-to-month basis in the face of an impending lawsuit filed in 2014.

The House filed suit against the Obama administration in 2014 under the leadership of former Speaker John Boehner, claiming it was illegally reimbursing marketplace insurers for CSRs.

Boehner and Republican House leaders argued CSRs require an annual appropriation approved by Congress. The House argued that because Congress had never explicitly appropriated the funds for those payments, the administration’s actions were unconstitutional. After nearly two years of deliberation, a federal district court concluded the House’s claim had legal standing and allowed the case move forward in May, 2016.

The Obama administration appealed the decision, which was followed up with 3 Republican delays, including one under the Trump administration. A troubling result of the appeal and numerous Republican-led delays is that CSRs are still funded as they were when the Obama administration first appealed.

Trump pledged in July to cut off funding for Obamacare subsidy payments if the Senate failed to pass a bill to repeal and replace former President Obama’s landmark health care legislation, echoing statements he made throughout the congressional push to overhaul Obamacare.

“If ObamaCare is hurting people, & it is, why shouldn’t it hurt the insurance companies & why should Congress not be paying what public pays?” Trump tweeted July 31.

Trump has remained relatively quiet on the issue since his tweet after Senate leadership failed three times to come to a consensus on the best way to reform the American health care system.

Obamacare requires insurers to provide the CSRs to low and moderate income individuals that participate in the state exchanges. To make consumers put more “skin in the game,” Obamacare effectively raised deductibles to levels that are tough for many Americans to meet without financial support. CSRs were instituted to help insurers with the costs of the deductibles that patients can’t otherwise meet.

These subsidies are calculated using the cost of coverage, which is set based on the second lowest cost silver plan on the Obamacare marketplace, and an affordability variable, which is calculated on a percentage of an individual’s annual income.

Individuals making $30,000 a year would have trouble paying a roughly $6,000 deductible that is common under the current system. Federal subsidy payments ease the burden on low income consumers and allow them to participate in the state exchanges. These payments also provide insurance companies with a sense of security when offering plans on the exchanges.

Insurance companies have been pleading with Congress and the administration to continue making CSR payments, as insurance providers are on the hook for $7 billion in CSRs in 2017 and another $10 billion in 2018.

The Congressional Budget Office (CBO) announced Tuesday afternoon that if Trump’s administration stops paying out Obamacare subsidies, the marketplace would be far less stable and will likely experience double-digit premium increases as a result.

The CBO reported Tuesday that premiums would rise 20 percent in 2018 and 25 percent in 2020. The non-partisan budget committee also projected that the federal deficit would increase by $194 billion from 2017 through 2026.

The changes in the number of uninsured Americans would be slightly higher in 2018 and, after a couple years of transition, would be lower in 2020, a CBO staff member told reporters. The CBO expects that out-of-pocket costs for obtaining an Obamacare Silver plan would decrease in 2020 if the administration enacted such a policy, which accounts for the higher number of insured consumers in 2020.

Some 5 percent of the nation would insurers in 2018, but, as markets adjust, nearly 100 percent of consumers would have at least one choice on the Obamacare state exchanges.

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