The Slatest

Trump Will Reportedly Cut Vital Obamacare Subsidy, Potentially Throwing Marketplaces into Upheaval

What a guy.


President Trump appears to be on the verge of fully sabotaging Obamacare with Politico reporting Thursday that he intends to cut off subsidy payments from the government to insurers selling coverage under the Affordable Care Act. The subsidies, which are estimated to amount to $7 billion this year, are designed to reduce the out-of-pocket costs of roughly 6 million low income Americans, who purchase coverage on the exchanges. The move, the Washington Post notes, “is likely to immediately threaten the marketplaces and could prompt insurers to withdraw.”


Here’s a summary of what the Congressional Budget Office determined to be the extreme costs of terminating the cost-sharing reduction (CSR) payments from the government (via the Center on Budget and Policy Priorities):

  • Stopping CSR payments would raise federal budget deficits by $6 billion in 2018 and $194 billion over the next ten years, relative to current law, due to increased costs for the ACA’s premium tax credits for low- and moderate-income people to offset their rising premiums.
  • Marketplace premiums for “silver-level” plans would rise by 20 percent, on average, in 2018. Premiums for such plans would be 25 percent higher in 2020 and thereafter, relative to current law.
  • Marketplace insurers in some states would withdraw from or not enter the marketplaces in 2018. As a result, the share of the nation’s population living in areas with no marketplace insurers would rise to 5 percent in 2018, up from less than 0.5 percent under current law.
  • The number of uninsured would rise by 1 million in 2018, relative to current law.


“The move is likely to draw lawsuits and may put pressure on Congress to appropriate funding for the subsidies,” according to Politico.

Update, 10:50 p.m.: The White House released this statement late Thursday night.

Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare.  In light of this analysis, the Government cannot lawfully make the cost-sharing reduction payments.  The United States House of Representatives sued the previous administration in Federal court for making these payments without such an appropriation, and the court agreed that the payments were not lawful.  The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system.  Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people.