President Trump discusses an executive order on Thursday of last week to seek ways for employers to offer health insurance. Later, the administration announced halting subsidy payments to insurers. Alex Wong/Getty Images
President Trump’s controversial decision on last Thursday to end subsidy payments to health insurance companies is project to raise premiums for middle-class families, which will cost the federal government billions of dollars.
The White House administration announced it would stop reimbursing insurers for discounts on co-payments and deductibles—which are offered to low-income consumers and required by law. The reimbursements known as cost-sharing reduction payments, or CSRs if halted, will place the lives of millions of Americans who rely on Obamacare at risk.
The subsidies known as cost-sharing reduction payments sent to insurance companies to keep health insurance premiums down for pre-existing conditions and the elderly has sounded the alarm for both Republican and Democratic lawmakers.
Ohio Governor John Kasich—outspoken for his views on health care voiced concerns to the GOP supporting Trump’s decision to end health insurance subsidies that kept premiums down.
“What are they doing? Are they just passing these things and people are praising what the president did because of politics?” Kasich asked, on Sunday’s “Meet the Press.”
“Do they understand the impact this has on families? On people? Read the stories of what these people are saying. What is the purpose of this? I’ve got to say…. this whole issue is about people. It is not about politics. It is not about numbers. It is about people.”
The Republican Governor, a critic of Republicans who want to repeal and replace the Affordable Care Act, remains consistent in his stance on preserving some key aspect of Obamacare while fixing areas that need fixing.
Attempting to analyze Trump’s reasoning for halting the subsidies, Kasich said he couldn’t determine if Trump did so, to harm President Obama’s signature legislative achievement by dismantling his predecessor’s legacy.
“I can’t read people’s minds, but what I can tell you is to cut these payments off—the people are saying, oh, well these are some big bonus to insurance companies,” Kasich said. “No, these were payments to insurance companies to make sure that hard working Americans who don’t make a lot of money can have their copayments taken care of. It’s a subsidy to do that. And what this — what this decision’s leading to are higher prices.”
Insurance companies will continue to offer discounts to low-income customers. When insurers are not reimbursed by the government, the insurance companies make up the cost by charging higher premiums for coverage.
The subsidy cut to dismantle Obamacare speaks to the strategy of the White House to suck the oxygen out of the Affordable Care Act insurance markets. The looming threat to end Obamacare, and the events unfolding on Thursday points to what many critics say is a deliberate campaign to destabilize the insurance markets—reliant upon the subsidies with hopes of forcing Congress to repeal the law.
President Trump uses the “executive pen” to chip away at dismantling Obamacare. Alex Wong/Getty Images
“Ending the CSR payments is another sign that President Trump is doing what he can to undermine the stability of the individual market under the ACA,” wrote Tim Jost, professor emeritus of law at Washington and Lee University who contributes to the Health Affairs blog.
Trump’s decision to end subsidies will more likely affect middle-class families purchasing insurance without financial help from the government. Consumers earning more than 400 percent of the federal poverty level — an individual with income of about $48,000, or a family of four that makes more than $98,400 — will likely see their costs for coverage increase next year by an average of about 20 percent nationwide.
Individuals with lower incomes will not be affected since the Affordable Care Act (ACA), also known as Obamacare, provides government subsidies — in the form of tax credits — that ensure out-of-pocket insurance costs for people with lower incomes remain stable. When premiums rise, the tax credits rise in tandem.
“We now know what ‘Trumpcare’ looks like, and it’s pretty ugly,” Ezekiel Emanuel, an oncologist who chairs the Department of Medical Ethics and Health Policy at the University of Pennsylvania said when speaking about the fall-out from the administration’s announcement.
“The people who are particularly going to hurt are the people who don’t get any subsidies. They just have to buy their own insurance,” Emanuel, one of the architects of the ACA, told Morning Edition on Friday.
According to the Congressional Budget Office the decision to end the $7 billion-a-year cost-sharing payments will likely cost the federal government more, with estimated figures of nearly $200 billion moreover 10 years.
One way to explain the CBO’s projection—the ACA requires that premiums don’t exceed a set percentage of a person’s income. As premiums set by insurance companies rise over time, the government has to boost its tax credits with the goal of the cost to the consumer remaining the same.
According to the Centers for Medicare and Medicaid Services, approximately 85 percent of people opting for Obamacare insurance got a tax credit in 2016. The cost-sharing payments have been at the center of a political debate over the Affordable Care Act before Trump took office.
Amid the political debate over Obamacare—House Republicans opposed to the health law sued then-President Barack Obama, citing the payments were illegal because Congress hadn’t appropriated money for them. A federal judge ruled in favor of House Republicans, but allowed the administration to continue making the payments during an appeal.
Threatening to cut off the payments on the campaign trial and during his presidency, Trump referred to as a bailout, he repeated that characterization on Twitter last Friday.
The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!
— Donald J. Trump (@realDonaldTrump) October 13, 2017
The White House cited that legal dispute about insurers having concerns about receiving subsidies—when it announced the end of the payments late Thursday in an official statement:
“The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system.”
The administration’s decision to end the cost-sharing payments came just hours after Trump signed an executive order for individuals and small businesses to purchase cheaper health insurance policies through trade groups and professional associations.
Those plans according to some health care analyst would likely have fewer benefits and appeal to healthier, younger people.
The president’s decision to halt subsidies risk splitting the health care market. Individuals with pre-existing conditions, low-incomes, or medical conditions like diabetes would remain in the ACA marketplaces, while healthier, wealthier people would seek coverage elsewhere. The result would be higher costs for people who need health care most.
By LeNora Millen 10-16-17