CBO: Trump Killing Obamacare Subsidies Would Raise Premiums and Budget Deficits

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Killing these CSR payments as Trump has threatened would be purely destructive. Photo: Joe Raedle/Getty Images

On occasion, when President Trump has issued his terroristic threats to cut off the so-called cost-sharing reduction payments to insurance companies, he’s made it sound like he’s just getting out of the way and letting Obamacare “implode.” And both he and some congressional conservatives like to talk as though continuing CSR subsidies (which help offset the cost of measures insurance companies are required to take under the Affordable Care Act to prevent large out-of-pocket costs for low-income policyholders) is just a “bailout for insurance companies.” How could regular people get upset about that?

Well, at the request of congressional Democrats the nonpartisan Congressional Budget Office released an official estimate of what would happen if CSR payments aren’t continued by the president or by Congress, and it’s not a pretty sight.

Since those “bailed-out” insurance companies will pass their uncompensated CSR costs onto consumers, individual insurance premiums would rise 20 percent in 2018 above the levels already expected, and another 5 percent more by 2020. And because many consumers hit by the premium increases will qualify for increased insurance purchasing tax credits from the federal government, the CBO estimates killing CSR subsidies would actually increase federal budget deficits by $194 billion over ten years. And that’s taking into account the $118 billion the government would save from not having to make the CSR payments themselves.

Oh, and for dessert, the CBO estimates this step would increase to 5 percent of the U.S. population the number of people living in places with no private individual insurance offerings.

As Sarah Kliff of Vox puts it:

It will cost the federal government nearly $200 billion to end the cost-sharing reduction subsidies. For that extra spending, the federal government would have a market with higher premiums and less competition. Trump talks a lot about making deals. This does not sound like a very good one.

It’s about as classic a penny-wise, pound-foolish decision any president or Congress could make. And despite all the kvetching about “saving” Obamacare or refusing to subsidize insurance companies, killing CSR payments would be purely destructive to market stability. There’s no more sugar-coating it.

CBO: Trump Killing Obamacare Subsidies Would Hike Premiums