CBO: Trump ending critical Obamacare payments would cause premiums to shoot up, federal deficit worsen

The Congressional Budget Office released its report on the impact of President Donald Trump ending Obamacare's cost-sharing reduction (CSR) payments on Tuesday.

CSR payments help to offset the cost to insurers that offer plans with low out-of-pocket costs to poorer Americans.

The payments became the subject of a lawsuit between the Obama administration and the Republican-controlled House in 2015. The House argued the way the CSRs were paid through the executive branch was illegal, and a judged ruled in their favor in 2016.

The Obama administration appealed the ruling, allowing the payments to continue. Trump had threatened to drop the appeal and cut off the payments repeatedly over the past few months.

Insurers have warned that without CSRs, they would likely have to dramatically raise premiums for 2018, well above their current planned increases.

Now, the CBO's nonpartisan analysis found that many of the insurers would follow through on their warnings. Here's a breakdown of the key findings:

• Premiums would increase more than originally projected: Premiums for 2018 would increase by 20% over the CBO's current baseline and by 25% over the 2020 projection. This would happen because in order to qualify for the Obamacare markets, insurers would still have to provide low-income enrollees with the same level of care without those costs being offset. "Because they would still be required to bear the costs of CSRs even without payments from the government, participating insurers would raise premiums of 'silver' plans to cover the costs," said the CBO.
• The federal deficit would increase as more people relied on subsidies to access insurance: The federal deficit would increase by $194 billion between 2018 and 2026 compared to the current baseline. "Because the tax credits would increase when premiums for silver plans rose, the agencies estimate that the average subsidy per person receiving premium tax credits to purchase nongroup health insurance would increase," said the CBO report. Put another way, since premiums would increase with no CSRs, Americans would need more help paying the higher costs through subsidies. The increased cost of subsidies, said the CBO, would be greater than simply funding the CSRs.
• Some insurers would pull out of the Obamacare markets, but not enough to cause a collapse: According to the CBO, if Trump ended CSRs, insurers would exit some of the Obamacare exchanges due to the higher costs. The exits, said the report, would impact areas where only 5% of the US population lives. By 2020, "almost all areas" would have at least one option for insurance according to the report. Health policy experts have previously warned that ending CSRs could lead to a mass exodus of insurers from the market; however, the CBO does not expect this to be the case.