Terminating the Affordable Care Act’s cost-sharing reduction payments to insurers would cause a short-term exit by insurers from the individual insurance marketplaces, but the availability of plans is expected to rebound, according to the Congressional Budget Office.
In a new analysis requested by Democratic leadership in the House of Representatives, CBO and staff from the congressional Joint Committee on Taxation (JCT) examined what would happen if the Trump administration announced by the end of August that it would cease to make cost-sharing reduction payments at the end of 2017.
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However, insurers would be on the hook to cover the payments no longer provided by the government, which means that “participating insurers would raise premiums of ‘silver’ plans to recover the costs.”
Gross premiums for silver plans “would be 20% higher in 2018 and 25% by 2020,” pushing higher premium tax credits and increasing the federal deficit by $194 billion from 2017 through 2026,” the report states. “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.”
The percentage of people facing a “slight increases” would be higher during the next 2 years, they pointed out.
The number of uninsured would be slightly higher in 2018 (about 1 million more uninsured) but then would be slightly lower starting in 2020 (about 1 million less each year).
Should the administration end cost-sharing reduction payments in 2017, those eligible for tax credits who have annual incomes 200%-400% of the federal poverty level would use their subsidies to purchase either gold or bronze plans, with silver plans going almost exclusively to people eligible for cost-sharing reductions (100%-200% of the poverty line).