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Report: Higher premiums if Trump halts subsidies

Profile image for Ricardo Alonso-Zaldivar
Ricardo Alonso-Zaldivar, Associated Press

WASHINGTON -- Premiums for a popular type of individual health plan would rise sharply, and more people would be left with no insurance options if President Donald Trump makes good on his threat to stop "Obamacare" payments to insurers, the Congressional Budget Office said Tuesday.

The nonpartisan number crunchers also estimated that cutting off payments that now reduce copays and deductibles for people of modest incomes would add $194 billion to federal deficits over a decade. That head-scratching outcome is because a different Affordable Care Act subsidy would automatically increase as premiums jump, more than wiping out any savings.

"Ending the payments to insurers would introduce more chaos into an unsettled market, and perversely end up costing the federal government more in the end," said Larry Levitt of the Kaiser Family Foundation, a nonpartisan group that found similar results.

At issue are the ACA's "cost-sharing" payments, totaling about $7 billion this year, which reimburse insurers for subsidizing out-of-pocket costs for people with modest incomes.

It's a financial break that can cut a deductible of $3,500 down to a few hundred dollars. Nearly 3 in 5 customers qualify for cost-sharing help, an estimated 6 million people or more. But the money is under a legal cloud because of a dispute over whether the Obama-era law properly authorized the payments. Trump has been threatening to end the monthly payments.

The White House immediately dismissed the report, saying that the president is still weighing options. Insurance industry groups say they have seen no sign that payments due at the end of August will be halted.

"Regardless of what this flawed report says, Obamacare will continue to fail with or without a federal bailout," White House spokesman Ninio Fetalvo said in a statement.

No final decisions have been made about the payments and "we continue to evaluate the issues," he said.

Insurers say they need a decision from the government now, before they lock down their rates for 2018.