Source: Health Policy Institute of Ohio
The Trump administration announced on October 12 that it plans to stop paying subsidies to health insurance companies that help pay out-of-pocket costs of enrollees with lower incomes (Source: “Trump to Scrap Critical Health Care Subsidies, Hitting Obamacare Again,” New York Times, October 12, 2017).
Without the subsidies, insurers have said they will need much higher premiums and may pull out of the insurance exchanges created under the Affordable Care Act (ACA). Known as cost-sharing reduction payments, the subsidies were expected to total $9 billion in the coming year and nearly $100 billion in the coming decade.
An analysis by the Congressional Budget Office in August determined that eliminating cost-sharing reductions would result in a 20% increase in silver plans offered on the ACA marketplace in 2018 and a 25% increase by 2020. The move is also projected to increase federal deficits by $6 billion in 2018 because premium increases will lead to higher subsidies for many enrolled in ACA plans.
The future of the payments has been in doubt because of a lawsuit filed in 2014 by House Republicans, who said the Obama administration was paying the subsidies illegally. Judge Rosemary M. Collyer of the U. S. District Court in Washington agreed, finding that Congress had never appropriated money for the cost-sharing subsidies.