CBO Finding Will Put Republicans in a Bind: What do They Hate More, Obamacare or Deficits?

by Joan McCarter –

At the request of House Democrats, the Congressional Budget Office has released its analysis of the costs of Trump’s Obamacare sabotage. Specifically, it analyzes what will probably happen if the Trump administration stops paying cost-sharing reduction payments to health insurers. Those are the repayments insurers get for subsidizing the deductibles, copayments, and other means of cost sharing to some of the people who purchase plans, as required by the law.

Its conclusions: premiums will be hiked 20 percent, then 25 percent in 10 years, and the deficit increased by $194 billion. In addition, about 5 percent of the population will live in an area where there is no individual insurance plan available—on or off the Obamacare exchanges—and more employers would likely end offering employment-based insurance.

Noting that these “effects are uncertain and would depend on how the policy was implemented,” the CBO finds:

  • The fraction of people living in areas with no insurers offering nongroup plans would be greater during the next two years and about the same starting in 2020;
  • Gross premiums for silver plans offered through the marketplaces would be 20 percent higher in 2018 and 25 percent higher by 2020—boosting the amount of premium tax credits according to the statutory formula;
  • Most people would pay net premiums (after accounting for premium tax credits) for nongroup insurance throughout the next decade that were similar to or less than what they would pay otherwise—although the share of people facing slight increases would be higher during the next two years;
  • Federal deficits would increase by $6 billion in 2018, $21 billion in 2020, and $26 billion in 2026; and
  • The number of people uninsured would be slightly higher in 2018 but slightly lower starting in 2020.

That deficit number? That’s a big problem for Republicans who are right now trying to figure out their tax “reform” plan. Having failed to destroy Medicaid and get that $800+ billion wiggle room for their big tax cuts, they’re going to have to figure out how they can scream about the deficit being the doom of the nation and at the same time increase it. So maybe they’ll want to think about fixing this problem.

Here’s why the CBO finds that this particular sabotage isn’t as disastrous for Obamacare customers as Trumpcare would have been: it doesn’t take insurance away from millions, and it doesn’t make premiums unaffordable for millions, as Trumpcare would have. That’s because the subsidies provided to Obamacare enrollees up to 400 percent of the poverty level are still in place—they didn’t get repealed. So the federal government will continue to pay that tax credit, and most enrollees will continue to be insulated from premium hikes—something like 80 percent of enrollees qualify for them. This is where they see a drop-off in employer-based coverage. They predict lower demand for insurance at the job, because it would be kind of a windfall for people signing up for good “silver” level plans, with healthy subsidies.

So while the federal government would save $118 billion by ending these payments, it would spend $365 billion more in premium subsidies. As Larry Levitt, senior VP of the Kaiser Family Foundation says, “Ending CSR payments to insurers seems like a pretty clear case of cutting off your nose to spite your face.”


Reprinted with permission from Daily Kos