Obamacare subsidy cut-off would raise insurance prices

President Trump at a listening session with health insurance executives at the White House earlier this year

President Trump at a listening session with health insurance executives at the White House earlier this year. Aude Guerrucci Bloomberg Getty Images

Doing so would be one step toward causing the Affordable Care Act to "implode" _ as Trump has sometimes put it. As of now, the government is making funding decisions on a month-to-month basis.

President Trump has threatened to end the payments, which would throw insurers and the exchanges into chaos for the year.

The payments became the subject of a lawsuit between the Obama administration and the Republican-controlled House in 2015. The payments had been made illegally.

The announcement of this month's payment, which will total about $600 million, drew praise from Sen. Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander, R-Tenn., is working on such legislation.

The impact also would be felt on those buying policies outside the marketplaces who earn too much to qualify for subsidies.

"These two actions will help make insurance policies available at affordable prices".

President Trump has sometimes falsely described the payments as a bailout to insurance companies.

Already, industry executives have publicly blamed the uncertainty for higher premiums for next year.

But just as he has done every month since taking office, Trump on Wednesday agreed to let them continue.

How is it possible that not paying a subsidy would cost the government money?

He also wants Congress to give states more flexibility under an Obamacare waiver program that allows states to experiment with their own systems of coverage after Senate Republicans failed to produce a bill that would repeal and replace Obamacare. But if cost-sharing reductions were discontinued, the premium tax credit would grow to $11,800.

Ending the cost-sharing subsidies would confound the expectations on which the current marketplace is based. Republicans went to court in 2014 to challenge them, saying Congress had never appropriated money for them. After a federal judge a year ago sided with Republicans, the subsidies have been in limbo while the Trump administration decides how to proceed. The ruling is on hold pending a decision on an appeal started by the Obama administration, which has been handed over to Trump's White House.

At one point, Trump administration officials talked of dropping the appeal as a way to kill the payments. Indeed, the CBO report repeated its earlier findings showing that the insurance marketplaces were stable in most places. Trump could decide to drop the White House's defense of the law, although he'd face a challenge from a coalition of Democratic state attorneys general who have sought to uphold the payments.

Cutting the cost-sharing payments ends up costing the government more because insurance companies say they will raise rates in response. About 5 percent of the nation's population would have no insurers in the individual insurance market next year without the subsidies, it said.

That's because insurers, even if they did not get the reimbursements from the federal government, are legally obligated to offer the cost-sharing reductions to eligible customers.

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