Popular vote loser Donald Trump has had one remarkably consistent idea when it comes to Obamacare: his ability to destroy it from within, or try to anyway, by withholding critical payments from the federal government to insurers who are essentially subsidizing the out-of-pocket expenses for lower-income people buying insurance on the Affordable Care Act’s exchanges. Basically, the payments compensate insurance companies who are making low-deductible plans available to lower-income people. Those enrollees, by the way, make up about 58 percent, or about 7 million, of all the Obamacare customers.
What happens if they go away, as early as today, as rumors suggest? The individual markets would be drastically disrupted and could potentially collapse completely. And who gets really hit? The middle class and lower-income people.
Insurers would have to decide whether to increase premiums for everyone in order to lower co-pays for people who get the
. They might end up pulling out of the market altogether over the uncertainty, leaving some places with few or no insurers. […]
Obamacare expanded health coverage for Americans in two major ways. It expanded Medicaid to cover poor adults making no more than 138 percent of the poverty line ($16,000 for an individual). And for people who make more money than that but don’t get health coverage through their jobs, the law created marketplaces where those people could buy insurance. Insurers were required to sell plans to everyone, no matter their medical history, at similar prices, and to cover a range of “essential health benefits.”
But with those changes, it still would have been difficult for many people—both low-income and middle-class—to afford insurance, not to mention the deductibles and copays they’d have to pay to actually see a doctor or fill a prescription. So people buying through the marketplaces also get financial assistance. Federal tax credits help pay monthly premiums for anyone making up to 400 percent of the poverty line ($48,000 for an individual).
People who earn too much for Medicaid but are still low-income—up to 250 percent of the federal poverty line, about $30,000 for one person—also got cost-sharing reductions for their private insurance. The federal government makes those payments to the health insurer to lower the out-of-pocket costs, the deductible and copayments, that those people have to pay for their health care. The less money people make, the more help they receive.
The problem for insurers is that if Trump pulls the money, they’re still on the hook to guarantee reduced cost-sharing to low-income enrollees. But they won’t be reimbursed for it anymore, so they’ll have to raise premiums—by as much as 19 percent, according to the Kaiser Family Foundation’s analysis—to compensate for the payments, or exit the markets. But this is an added twist that should piss everybody off—those increased premiums would likely be to the baseline, “silver” plans, the ones with CSRs are available to insurance companies for. If the premiums for that level increases, the premium tax subsidies would have to increase, too, because they’re based on silver premiums. Which means the federal government could be spending $2.3 billion more if Trump ends the payments.