Premiums would rise and the federal deficit would increase if the Trump administration ends payments to health insurers that subsidize out-of-pocket costs like deductibles for lower-income customers, the nonpartisan Congressional Budget Office said Tuesday.
The extension comes as insurance companies wait for President Trump to decide whether he will continue to make payments to insurance companies that are called for under the Affordable Care Act but that some Republicans have opposed. But the federal government would wind up spending $194 billion more.
Ending the cost-sharing subsidies would confound the expectations on which the current marketplace is based. About five percent of the population would not be able to buy insurance through Obamacare at all next year, the CBO predicted, because companies would withdraw plans in response to the "substantial uncertainty" created by the move.
Several insurers have cited the uncertainty over the payments in raising insurance premiums by double digits for 2018 or in exiting some individual insurance markets.
While President Trump hasn't chose to continue pushing the lawsuit against the Obama administration, multiple Democrat state attorneys have gotten involved, the court giving them permission because they said that they were under-represented by Trump. The Obama administration, which had requested an appropriation, made a decision to pay them anyway.
The report was requested by House Minority Leader Nancy Pelosi (D-Calif.) and Democratic Whip Steny Hoyer.
President Trump has sometimes falsely described the payments as a bailout to insurance companies.
This aspect of the law is created to attract healthier Americans and offset the costs of treating the sickest people, thereby keeping premium costs down.
"Because the tax credits would increase when premiums for silver plans rose, the agencies estimate that the average subsidy per person receiving premium tax credits to purchase nongroup health insurance would increase", the CBO report states.
Insurers are projected to receive $10bn (£7.76bn) in subsidies in 2018. In other words, for some consumers, gold plans could be cheaper than silver plans. The cost to consumers, however, would stay the same or even decline, because the premium increases would be offset by tax credits, which we explain further below. He said Sen. Lamar Alexander, R-Tennessee, is working on "some kind of bipartisan approach" that would involve subsidies for insurance companies.
The payments have been put into question since the House Ways and Means and the Energy and Commerce committees investigated the source of funding for the subsidies and said they were unconstitutional.