Trump Administration Agrees to Uphold Key Subsidies Paid to Insurers Under Obamacare

Posted August 18, 2017

Those discounts are mandated by law.

Last year, about 85 percent of people who bought Obamacare insurance got a tax credit, according to the Centers for Medicare and Medicaid Services. Nearly 6 million people qualified previous year.

The subsidies are snared in a legal dispute over whether the health care law passed under President Barack Obama properly approved the payments to insurers.

The president previously has tried to use the threat of ending the cost-sharing payments as a means to force passage of a bill to replace Obamacare.

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Doctors, hospitals, insurers, consumer groups and the U.S. Chamber of Commerce have all urged Trump to continue paying the cost-sharing subsidies. Sen.

Obamacare's exchanges are still fragile: Many insurers raised premiums and pulled out of some markets previous year after finding the customers who signed up tended to be sicker and more expensive than they hoped. Although less money would be spent on the payments to insurers, the government would be required to spend even more money to offset the increase in premiums, the CBO said.

Insurers are projected to receive $10bn (£7.76bn) in subsidies in 2018.

Congress has never appropriated the billions of dollars to fund the CSR payments and the House of Representatives sued the Obama administration for sending the money to insurers, saying it is unconstitutional. The House argued the way the CSRs were paid through the executive branch was illegal, and a judged ruled in their favor in 2016. The Obama administration, which had requested an appropriation, made a decision to pay them anyway.

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Trump has dangled the possibility of cutting off CSRs in numerous tweets, calling them "bailouts" for insurers and threatening to let Obamacare "collapse".

If Trump stops payment of the subsidies, the budget office said, insurers will increase premiums for midlevel "silver plans", and the government will incur additional costs because, under a separate program, it provides financial assistance to low-income people to help them pay those premiums. They would pay a little more for these policies, but the larger premium subsidies would cover much of the higher premium.

"After threats by President Trump and his administration to end cost-sharing reduction payments have already rattled consumers and the health care market, we are glad the administration is making these crucial payments to help lower out-of-pocket costs and increase deductibles for August", said Leslie Dach, campaign director for Protect Our Care, a coalition that rallied to Obamacare's defense in recent months. Health plans may stop being involved with Obamacare if the president follows through with his plan to drop the payment.

His committee is scheduled to hold bipartisan hearings on stabilizing the health insurance market the week of September 4. In some states, companies have submitted two preliminary rates for their 2018 plans - one in which the CSR payments continue, and a higher one if they're cut off. Insurers must make a final decision on whether to participate in the 2018 markets next month.

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