Why Did Trump Gut Obamacare Subsidies? Middle-Class Families Will Be Hurt The Most
In the latest Republican effort to dismantle the Affordable Care Act, President Trump announced late on Thursday night that the government will no longer pay the cost-sharing reduction payments (CSRs) that help low-income people receive health care coverage. After failing time and time again to repeal the ACA in Congress, Trump's termination of Obamacare subsidies is poised to impact millions of Americans by raising their premiums by 20 percent and leaving 1 million people uninsured by 2018, throwing the market into chaos.
Under Obamacare, the government was required reimburses health insurers for lowering co-pays and deductibles for low-income people. Nearly 6 million people — or 57 percent of enrollees — qualify for CSRs this year, according to data from the Department of Health and Human Services. The government then pays out the subsidies on a monthly basis, adding up to $7 billion in 2017. But Trump announced on Thursday night these subsidies were over.
Middle-class families who make too much money to qualify for Medicaid will be impacted by the new order. Because insurance companies are still required to give benefits to low-income customers, they will have to make up the money by charging higher premiums if the government doesn't reimburse the insurers. The order will most likely impact middle-class families that buy their own insurance without government aid, and could see their costs for coverage rise by 20 percent nationwide, according to NBC.
In August, the Congressional Budget Office reported that ending CSRs would first raise the number of uninsured Americans by 1 million by 2018, and would eventually lower the number of uninsured by 1 million starting in 2020. The CBO predicts that increases in tax credits by 2020 would make purchasing insurance more attractive and as a result, a larger number of people would buy coverage through the marketplace. Even so, this change is not expected to become permanent. By 2021, the number of uninsured could decrease by 1 million before going back up by 1 million in 2022.
"We now know what Trumpcare looks like and it's pretty ugly," said Ezekiel Emanuel, an oncologist who helped create the ACA for the Obama administration, told NPR. "The people who are particularly going to hurt are the people who don't get any subsidies. They just have to buy their own insurance."
In addition to Democratic dissent, Republican Representative Ileana Ros-Lehtinen from Florida voiced her opposition to Trump's order, remarking that it would leave people uninsured in her district. "@potus promised more access, affordable coverage. This does the opposite," she tweeted on Thursday night.
Thursday's late-night announcement came on the heels of Trump's executive order earlier that day gutting Obamacare insurance rules. The order asks the Department of Labor to redefine association health plans, a way for small businesses to pool together to buy insurance, so that they can have access to cheaper premiums.
Before Obamacare, national associations could choose which states' insurance rules they wanted to follow and have those rules guide their plans, allowing younger and healthier employees to have better, cheaper coverage, according to an analysis by Vox. Obamacare changed these rules by treating association health plans as small businesses and requiring them to cover all the mandated benefits. Obamacare also prevented plans from crafting coverage that would only insure young and healthy customers at the expense of sicker people.
Older and sicker customers will therefore bear the burden of Trump's executive order. One of the biggest concerns is that the new policies would allow insurance plans to charge higher prices for customers with pre-existing health conditions, cover fewer benefits, and charge higher deductibles, according to The New York Times. Because insurers tend to cover healthy customers, it would allow them to opt out of the individual market and leave people with serious health conditions stuck in Obamacare plans.
"It is a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America," said Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi in a statement following the White House's announcement. "Trumpcare collapsed because Americans overwhelmingly recognized the cruelty and higher costs it meant for them and their loved ones. Now, millions of hard-working American families will suffer just because President Trump wants them to. Make no mistake about it, Trump will try to blame the Affordable Care Act, but this will fall on his back and he will pay the price for it."