The Congressional Budget Office released an analysis yesterday showing what would happen if the Trump administration made good on its months-long threat to stop making payments to insurers on the Affordable Care Act's cost-sharing reduction payments (CSRs)—the $8 billion fund that lowers deductibles and co-pays for low-income ACA enrollees. The report, which was produced at the request of the House Democratic leader and the House Democratic whip, lays out the repercussions that would arise from insurers knowing that the CSRs would be paid only through December of 2017:
(Gross) Premiums Would Go Up
Under the ACA, insurers are required to offer plans with lower out-of-pocket costs (reduced deductibles, co-pays, etc.) on silver-level plans to lower-income Americans who purchase their insurance through the ACA's non-group markets. The government then makes payments to insurers to compensate them for offering those plans.
If the government stopped providing the CSRs to insurers, insurers would still be required to offer those types of plans to low-income Americans, but they would no longer be reimbursed by the government for those costs. Insurers would likely respond by increasing premiums on silver-level ACA plans (the types of plans that premium subsidy levels are pegged to). The CBO projects that gross premiums on those plans (premiums before ACA premium subsidies) would be 20 percent higher in 2018 and 25 percent higher by 2020.
The Deficit Would Increase
Yes, you read that right. The ACA's premium subsidies are pegged to the cost of silver-level plans in a given geographic area, so when premiums go up, the federal government has to spend more money on premium subsidies. The increase in the value of the premium subsidies, meanwhile, would result in slightly more people actually purchasing health insurance in the ACA's non-group markets, further driving up government spending.
All in, the CBO predicts that eliminating the CSRs would increase the federal deficit by $194 billion between 2017 and 2026.
The Number of Uninsured Would First Increase, Then Decrease
In 2018, the CBO predicts that the number of uninsured people in the country would be slightly higher (by about one million people) than under current law. By 2020, however, the number of uninsured would be slightly lower (by about one million people in each year). The increase in the uninsured population in 2018 is due to the uncertainty introduced by ending the CSRs, which would slightly increase (to 5 percent) the percentage of the population living in an area with no insurers over the next couple of years. By 2020, however, the agency predicts that the percentage of the population living in "bare" counties would be about the same as under current law.