I can't wait to hear what the Obama-Pelosi apologists come up with on this one.
Blame-Sharing on ObamaCare
CBO finds ending insurance subsidies won’t kill the exchanges.
The Editorial BoardAug. 16, 2017 7:29 p.m. ET
Photo: Bloomberg News
By
The Editorial Board
The oracles at the Congressional Budget Office this week descended from Delphito predict 20% premium increases if the Trump Administration ends illegal Obama Care subsidies for insurers, and Democrats are happy to agree. Yet a careful reading of the report reveals some surprising results that are far less ominous and for consumers mostly benign.
CBO and the Joint Committee on Taxation analyze what would happen if the Trump Administration cut off “cost-sharing” subsidies, which are government payments to insurers that defray deductibles and co-pays for certain people below 250% of the poverty line. These individuals earn south of about $30,000 a year, or $60,000 for a family of four, and have essentially been forced to purchase insurance they cannot afford.
Congress has in recent years declined to appropriate funding for the payments, though the Obama Administration wrote checks anyway. A federal judge last year ruled this violates the Constitution, and the case is on appeal. President Trump earlier this summer threatened to stop the payments, though on Wednesday his Administration said it would make them for August. Insurers are warning of double-digit premium increases, and Democrats are trying to shift the blame for those rising prices and fewer insurance choices to Republicans who didn’t vote for the Affordable Care Act.
CBO’s report this week finds that the exchange’s silver plans—the consumer plans are called bronze, silver and gold—would see 20% premium increases in 2018. Yet the report notes that most of this will be absorbed by tax credits that by statute increase with premiums. In other words, insurers who are telling Republicans to hand over the money or risk the GOP majority will get paid in any case.
CBO says the higher subsidies mean that the increased spending on tax credits will add $194 billion to the deficit through 2026, though a truck could fit through the caveats. Ending the subsidies would add $6 billion to the deficit next year, which regrettably is a rounding error in Washington. The figure increases in later years—$26 billion in 2023—assuming no changes in policy over the next decade. But when has that happened? By then who knows what health-care bill President Zuckerberg will have signed.
By the way, CBO says that choking off the payments would produce no significant change in the number of insured individuals, at least not any time soon. Remember that the ostensible goal of the law’s subsidies and penalties was to increase the number insured. Also notable: The report predicts that more flight from the exchanges could lead to no insurance options for a fraction of individuals, though over time that could change. In short: No one knows.
Even more surprising, analyst Charles Blahous says the report shows that killing the subsidies could lower costs for some consumers, especially the near-elderly, whose premiums would rise very little while they would be able to afford gold plans that are worth more.
One lesson of all this is that Republicans in Congress needn’t panic and rush into a bad deal with Senate Democrats that would continue the payments. The GOP understandably wants to avoid being blamed for failing ObamaCare exchanges in next year’s midterm elections, but the insurance market won’t implode if the subsidies end. Republicans should insist on significant insurance market reforms and more flexibility for states in any deal.
There’s no evidence from CBO or anywhere that continuing the subsidies will stop ObamaCare’s trend toward higher costs and fewer choices. The GOP should use this moment to scrap some of the law’s mandates—and make improvements at the margin that would benefit the American public.
Appeared in the August 17, 2017, print edition.
Blame-Sharing on ObamaCare
CBO finds ending insurance subsidies won’t kill the exchanges.
The Editorial BoardAug. 16, 2017 7:29 p.m. ET
Photo: Bloomberg News
By
The Editorial Board
The oracles at the Congressional Budget Office this week descended from Delphito predict 20% premium increases if the Trump Administration ends illegal Obama Care subsidies for insurers, and Democrats are happy to agree. Yet a careful reading of the report reveals some surprising results that are far less ominous and for consumers mostly benign.
CBO and the Joint Committee on Taxation analyze what would happen if the Trump Administration cut off “cost-sharing” subsidies, which are government payments to insurers that defray deductibles and co-pays for certain people below 250% of the poverty line. These individuals earn south of about $30,000 a year, or $60,000 for a family of four, and have essentially been forced to purchase insurance they cannot afford.
Congress has in recent years declined to appropriate funding for the payments, though the Obama Administration wrote checks anyway. A federal judge last year ruled this violates the Constitution, and the case is on appeal. President Trump earlier this summer threatened to stop the payments, though on Wednesday his Administration said it would make them for August. Insurers are warning of double-digit premium increases, and Democrats are trying to shift the blame for those rising prices and fewer insurance choices to Republicans who didn’t vote for the Affordable Care Act.
CBO’s report this week finds that the exchange’s silver plans—the consumer plans are called bronze, silver and gold—would see 20% premium increases in 2018. Yet the report notes that most of this will be absorbed by tax credits that by statute increase with premiums. In other words, insurers who are telling Republicans to hand over the money or risk the GOP majority will get paid in any case.
CBO says the higher subsidies mean that the increased spending on tax credits will add $194 billion to the deficit through 2026, though a truck could fit through the caveats. Ending the subsidies would add $6 billion to the deficit next year, which regrettably is a rounding error in Washington. The figure increases in later years—$26 billion in 2023—assuming no changes in policy over the next decade. But when has that happened? By then who knows what health-care bill President Zuckerberg will have signed.
By the way, CBO says that choking off the payments would produce no significant change in the number of insured individuals, at least not any time soon. Remember that the ostensible goal of the law’s subsidies and penalties was to increase the number insured. Also notable: The report predicts that more flight from the exchanges could lead to no insurance options for a fraction of individuals, though over time that could change. In short: No one knows.
Even more surprising, analyst Charles Blahous says the report shows that killing the subsidies could lower costs for some consumers, especially the near-elderly, whose premiums would rise very little while they would be able to afford gold plans that are worth more.
One lesson of all this is that Republicans in Congress needn’t panic and rush into a bad deal with Senate Democrats that would continue the payments. The GOP understandably wants to avoid being blamed for failing ObamaCare exchanges in next year’s midterm elections, but the insurance market won’t implode if the subsidies end. Republicans should insist on significant insurance market reforms and more flexibility for states in any deal.
There’s no evidence from CBO or anywhere that continuing the subsidies will stop ObamaCare’s trend toward higher costs and fewer choices. The GOP should use this moment to scrap some of the law’s mandates—and make improvements at the margin that would benefit the American public.
Appeared in the August 17, 2017, print edition.
