“What it adds up to me is a gross dereliction of duty,” John Baackes, CEO of L.A. Care Health plan said of the decision. “The Affordable Care Act is still the law of the land and the cost-reduction subsidies are part of that. … Even if there’s a lawsuit about it, it should still be honored until the last appeal is exhausted. I thought they took oaths to uphold the law of the land. They’re just flaunting it now” [Josh Dawsey and Paul Demko, “Trump Will Scrap Critical Obamacare Subsidy,” Politico, 2017.10.12].
In August, the Congressional Budget Office reported that eliminating the cost-sharing reductions (CSR) would push premiums for ACA silver plans up 20% beyond previous baseline projections. But while Trump’s chaos might temporarily drive some insurers out of the ACA marketplaces and leave 5% of Americans living in areas with no individual market insurance vendors, the CBO says the increases in premiums would trigger increases in ACA premium tax credits:
Implementing the policy would increase the federal deficit, on net, by $194 billion from 2017 through 2026, CBO and JCT estimate. Total federal subsidies for health insurance in the nongroup market—in particular, the sum of the premium tax credits and the CSR payments—would increase for two reasons: The average amount of subsidy per person would be greater, and more people would receive subsidies in most years.
Because the tax credits would increase when premiums for silver plans rose, the agencies estimate that the average subsidy per person receiving premium tax credits to purchase nongroup health insurance would increase. Increases in those tax credits for people with income between 100 percent and 200 percent of the FPL would roughly offset the reductions in CSR payments. However, increases in premium tax credits for those with income between 200 percent and 400 percent of the FPL would substantially exceed the small reductions in CSR payments for this group [Congressional Budget Office, “The Effects of Terminating Payments for Cost-Sharing Reductions,” August 2017].
So Donald Trump may think he’s building on his legacy of erasing Barack Obama’s legacy (when all a President does is negate what his predecessor did, do we call that a negacy?), but according to the CBO, in this case he’s upsetting the markets, driving additional premium increases, and creating more costs for taxpayers.
The CBO report says that the increased premium tax credits won’t insulate silver-plan buyers from paying more. At the bottom of the income scale, net silver premiums for individuals making $18,900 a year go up 11%; individuals making $26,500 pay 9% more.
In a joint statement, the top Democrats in Congress, Senator Chuck Schumer of New York and Representative Nancy Pelosi of California, said Mr. Trump had “apparently decided to punish the American people for his inability to improve our health care system.”
“It is a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America,” they said. “Make no mistake about it, Trump will try to blame the Affordable Care Act, but this will fall on his back and he will pay the price for it” [Robert Pear, Maggie Haberman, and Reed Abelson, “Trump to Scrap Critical Health Care Subsidies, Hitting Obamacare Again,” New York Times, 2017.10.12].
Cutting health care subsidies will mean more uninsured in my district. @potus promised more access, affordable coverage. This does opposite.
— Ileana Ros-Lehtinen (@RosLehtinen) October 13, 2017
So let’s get clear, Representative Kristi Noem, Senator Mike Rounds, and Senator John Thune: if you want to keep the deficit from growing, and if you want to protect more than 27,000 South Dakotans from premium increases, you sit down with Democrats, make the Alexander/Murray compromise bill work, and save the cost-sharing reductions from Donald Trump’s blind flailings.