President Donald Trump is halting some Obamacare subsidies. A big money saver for taxpayers, right? Wrong. The move could actually force the government to dole out almost $200 billion more on health insurance over the next decade.
Here’s why: The insurer payouts Trump cut off aren’t the only government funds financing the program. Consumers also can get help with their insurance premiums. When the insurer subsidies are discontinued, those premiums are pushed higher — and because the consumer subsidies are far bigger than those given to insurers, that’s a costly trade.
More than eight in ten individuals who buy Obamacare plans get help paying their premiums directly from the federal government. Those subsidies effectively cap how much people have to pay for insurance as a percentage of their income.
Even if premiums climb, people who receive those benefits won’t pay more out of their own pockets. The subsidies are available to people making as much as four times the federal poverty level, or just over $97,000 for a family of four.
That means that those most likely to be hurt by the president’s action aren’t low-income people who will still get help with their costs. Instead, consumers who make too much money to qualify for subsidies will now have to pay a much higher price for their health plans.
It all adds up to a hefty bill for taxpayers for as long as the Affordable Care Act is the law of the land. The Congressional Budget Office estimated that ending the cost-sharing payments would increase the U.S. fiscal shortfall by $194 billion over the next decade as subsidy outlays jump.