October 13, 2017


Why Trump's Obamacare Sabotage May Backfire -- and Give Millions Free Health Care (Eric Levitz, 10/13/17, New York)

[H]ere's the crucial thing: Insurers are still required to give low-income people the discounts. Trump can't change that regulatory requirement without passing a law. All he can do is stiff the insurers. (And according to health-care economist Nicholas Bagley, he can only do that temporarily. Insurers still have a legal entitlement to reimbursement -- even if the Treasury can't legally honor that entitlement without congressional consent. So, the insurers can sue the government and collect what they're owed through a special fund dedicated to settling Uncle Sam's lawsuits.)

For insurers, this drastically increases the (near-term) costs of participating in Obamacare. In response, some will exit the exchanges, while others will jack up the premiums on their silver-level plans by roughly 20 percent, according to the CBO. This is the part of Trump's sabotage that will hurt some ordinary people: It's possible that insurers will completely abandon some counties, and that people who earn too much to qualify for subsidies -- but don't get insurance through their employer -- will see their health-care costs increase. While the CBO expects the cancellation of the cost-sharing reductions to (ironically) give more Americans insurance in the long-term, the budget office expects it to result in fewer Americans having insurance next year, amid these marketplace disruptions.

That said, the vast majority of people who use Obamacare do qualify for subsidies. And those subsidies are tied to the price of silver-level plans. Which is to say: The more expensive silver plans get, the bigger most Obamacare enrollees' subsidies become. If you are an ACA enrollee who makes 200 percent of the poverty line, the law guarantees you a tax credit big enough to lower the cost of a silver-level plan to 6.43 percent of your annual income -- no matter how expensive the silver plan gets. Critically, while the size of the tax credit is tied to the silver plan, enrollees can spend that credit on gold- or bronze-level ones, if they so choose.

Posted by at October 13, 2017 6:59 PM