Trump To Democrats: Negotiate On Obamacare, Or Else

If Mr. Trump stops payment of the subsidies, the budget office said, insurers will increase premiums for midlevel “silver plans,” and the government will incur additional costs because, under the Affordable Care Act, it also provides financial assistance to low-income people to help them pay those premiums.

Insurers in some states would withdraw from the market because of “substantial uncertainty” about the effects of the cutoff, the budget office said. About 5 percent of the nation’s population would have no insurers in the individual insurance market next year without the subsidies, it said. By contrast, if the subsidies are paid, fewer than one-half of 1 percent of people would be in such areas, the report said.



If Trump Stops Funding Key Health Care Subsidies, the Federal Government Will Actually Pay More

A newly released report says that the move would cause higher premiums and a larger federal deficit.

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The federal government helps pay premiums for low-income people by providing them with tax credits, which generally insulate them from insurance price increases.

“Gross premiums for silver plans offered through the marketplaces would be 20 percent higher in 2018 and 25 percent higher by 2020 — boosting the amount of premium tax credits according to the statutory formula” in the Affordable Care Act, the budget office said.

The budget office does not foresee much change in the number of people who are uninsured if the cost-sharing subsidies are halted. “The number of people uninsured would be slightly higher in 2018 but slightly lower starting in 2020,” it said.

A White House spokesman, Ninio Fetalvo, said Tuesday that “no final decisions” had been made regarding the subsidy payments.

“Regardless of what this flawed report says, Obamacare will continue to fail with or without a federal bailout,” Mr. Fetalvo said. “Premiums are accelerating, enrollment is declining, and millions are seeing their options dwindling. This disastrous law has devastated the middle class and must be repealed and replaced.”

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The dispute over the subsidy payments dates to 2014, when House Republicans filed a lawsuit asserting that the Obama administration was paying the subsidies illegally because Congress had never appropriated money for them. Last year, a federal judge agreed. The judge ordered a halt to the payments but suspended the order to allow the government to appeal. The case is pending before the United States Court of Appeals for the District of Columbia Circuit.


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The Trump administration has been providing funds for cost-sharing subsidies month-to-month, with no commitment to pay for the remainder of this year, much less for 2018.

The budget office study was requested by the House Democratic leader, Nancy Pelosi of California, and the House Democratic whip, Steny H. Hoyer of Maryland. “If he follows through with his threats,’’ Ms. Pelosi said on Tuesday, “President Trump will be single-handedly responsible for raising premiums across America by 25 percent, exploding the deficit by nearly $200 billion, and creating more bare counties” without insurers.

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Document: Read the C.B.O.’s Report

Mr. Trump and some Republicans in Congress call the payments a bailout for insurance companies. But under the Affordable Care Act, insurers are required to provide the discounts to low-income people, who they say are the real beneficiaries.

Ending the cost-sharing subsidies would confound the expectations on which the current marketplace is based. People with incomes from 200 percent to 400 percent of the poverty level (roughly $23,750 to $47,500 a year for an individual) could get larger tax credits and could use them to buy more robust plans covering a larger share of their medical expenses, the budget office said.

Thus, for example, a 40-year-old with income of $34,000 would pay about $3,350 a year — after tax credits — for a “silver plan” in 2026, but could get a more generous gold plan for several hundred dollars less, the budget office said. In other words, for some consumers, gold plans could be cheaper than silver plans.

“As a result,” the budget office said, “more people would purchase plans in the marketplaces than would have otherwise, and fewer people would purchase employment-based health insurance — reducing the number of uninsured people, on net, in most years.”

About six million people are receiving the cost-sharing subsidies, according to the Department of Health and Human Services. Terminating those subsidies would save the government $8 billion next year and a total of $118 billion through 2026, the budget office said. But those savings would be swamped by the increased cost of premium tax credits, it said.

Doctors, hospitals, insurers, consumer groups and the U.S. Chamber of Commerce have all urged Mr. Trump to continue paying the cost-sharing subsidies. Senator Lamar Alexander, Republican of Tennessee and the chairman of the Senate health committee, has said he plans to hold hearings next month, with a view toward producing bipartisan legislation that would stabilize insurance markets and provide money for the subsidies.

“Without these payments, Americans may not have access to or be able to afford health insurance next year because of dramatic individual insurance premium increases in the individual market,” Mr. Alexander said on Tuesday.


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“When the house is on fire, you put out the fire, and Congress should work quickly in September to pass limited, bipartisan legislation that funds cost-sharing payments for 2018 and gives states more flexibility to offer lower-cost plans,” he said.

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A version of this article appears in print on August 16, 2017, on Page A1 of the New York edition with the headline: Letting Health Law ‘Implode’ Would Make Premiums Soar. Order Reprints| Today's Paper|Subscribe

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