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By Cutting Off Obamacare’s Insurer Subsidies, Trump Might Help More People Get Health Coverage

The president has finally brought the law into constitutional compliance.

Ron Sachs/dpa/picture-alliance/NewscomRon Sachs/dpa/picture-alliance/NewscomPresident Trump announced today that he will stop making payments to health insurers under Obamacare.

The payments, which are called for by statute, began under President Obama. But a federal court ruled last year that because Congress never appropriated funding, making the payments violated the separation of powers and thus was illegal. Obama, however, kept paying them anyway. So, up until now, has Trump. With this move, Trump brings the administration of Obamacare into constitutional compliance.

Supporters of Obamacare have already started complaining that President Trump's decision amounts to sabotage. Sen. Chris Murphy (D-Ct.), for example charged on Twitter this morning that stopping the health care payments "is nuclear grade bananas - a temper tantrum that sets the entire health system on fire." President Trump, who has threatened to cut off the payments all year in an attempt to create bargaining leverage, almost certainly sees the move as a way of kneecapping the exchanges.

But there's something funny about the move: In the long run, it might actually increase the number of people with health insurance coverage. It would cost the government more, cause short-term turbulence, and increase the deficit, but after it all shakes out, Obamacare would end up covering even more people. Trump might have just made Obamacare more generous.

The payments in question are known as cost-sharing reduction (CSR) subsidies. They are paid directly to insurers, and they provide extra financial for individuals who make between 100 and 250 percent of the poverty line. Cut those subsidies off, and insurers will try to make up the difference by raising premiums. In a report on the likely effects of cutting off the subsidies earlier this year, the Congressional Budget Office estimated that premiums would be about 20 percent higher for typical plans purchased under the law.

But the premium hikes won't directly affect most low-income people, however, because Obamacare's subsidies increase with premiums, insulating those individuals from higher costs. Instead, this move is likely to raise premiums for people who earn too much to qualify for subsidies under Obamacare—which is to say, the people who have already been hit hardest by the law's price hikes. The expansion of the subsidies, meanwhile, gets paid for by taxpayers, increasing the deficit by about $194 billion over the next decade.

What CBO expects to happen, then, is that, as a result of premium increases, higher income people will find Obamacare plans less appealing, and fewer will buy coverage next year, resulting in about 1 million fewer people with health coverage in 2018. But over time, the increased subsidies would actually make coverage more attractive for those with qualifying incomes. By 2026, the CBO projects, about a million more people will have coverage.

If CBO is right, in other words, Trump's decision to cut off CSRs will make Obamacare more expensive for taxpayers, but will also result in more people with subsidized coverage over time. Regardless of what Trump intends, that doesn't exactly sound like sabotage.

The CBO could be wrong, of course. The agency's coverage estimates have certainly been off before. But the budget office's analysis is, at minimum, a reminder that the long-term effects of this change could be more complex than many people seem to think. If nothing else, this decision will act as a stress test of CBO's insurance coverage model.

There are other wrinkles too: As law professor Nicholas Bagley points out, insurers are likely to sue over lost payments, which this year come to about $7 billion. The payments were not appropriated by Congress, but they are called for in the statute of the health care law, and insurers may well win. Health insurers have already won suits against the government in related cases involving other subsidies built into the law.

President Trump, meanwhile, still appears to have a worrying view of his own authority with regards to the subsidies. The entire point of the case against them was that the White House, under Obama, did not have the authority to decide whether or not to pay them, because under the Constitution, the power of the purse lies with Congress alone. Either Congress appropriated them, or it didn't, and in either case the executive branch would have a duty to spend, or not spend, accordingly. Congress didn't appropriate the money, and therefore neither Obama nor Trump had the authority to make the payments.

If Trump actually believes the payments are unconstitutional, he should have stopped making the payments immediately upon taking office. But he didn't. He repeatedly dangled the possibility of cutting off the payments, and administration health officials reportedly also hinted that they might continue making them if insurers supported the GOP's health care legislation this summer.

Trump, in other words, has acted as if the decision to pay or not is the president's to make. The point of last year's federal ruling is that it is not.

Yet he still seems to believe that it is. Early this morning, after news broke that he would cut off the payments, he tweeted that he was still willing to bargain. "The Democrats ObamaCare is imploding," he wrote. "Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!"

This is not Trump's to "fix." It is a decision for Congress and Congress alone. Perpetuating the idea that the decision should or can come from the White House helps erode the rule of law.

Cutting off the payments has, for the moment, brought Trump's into constitutional compliance, but it's not clear that Trump himself actually understands what that means.

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  • Sevo||

    "But a federal court ruled last year that because Congress never appropriated funding, making the payments violated the separation of powers and thus was illegal. Obama, however, kept paying them anyway."

    I'd certainly like to know who signed those checks.

  • Mickey Rat||

    We taxpayers did with Obama as our proxy.

  • Tak Kak||

    He does seem to be treating this like DACA, calls it unconstitutional but only to the extent of using it as leverage.

  • BYODB||

    I think he should have done this sooner, a lot sooner, but I can understand why he might do this. Namely, because he knows full well that Democrats aren't going to call him on it and Republicans aren't either. So using it as a bargaining chip was probably his 'best' move if you don't give a shit about things like the law. It seems he's going to continue knocking holes in the ACA until someone gives him his unicorn. This isn't the worst thing around though, considering unicorns don't exist.

    It's almost poetic, in a way, or at least it would be if any of it mattered long term. The next King will just reverse it or do whatever the hell they want with it. That is my major problem with all of this nonsense.

  • John||

    Congress passed a law that could not be implemented as written and was unconstitutional. The Supreme Court then refused to do its job and invalidate the entire law. Everyone remembers the infamous "penaltax" opinion of Roberts' but they forget that Roberts and the majority of the court declared a huge portion of the law, the state medicare expansion", unconstitutional. The court should have struck down the entire law not just gutted it of the provisions it didn't like. So the country ends up with a law that could not be implemented as written and which a large portion of it was struck down by the courts. Obama, being Obama, refused to compromise or just give up and repeal the law before it went into effect. He let the law go into effect and just had the executive rewrite and reinterpret it as they saw fit. And Congress stood by and let him do it.

    Along comes Trump and the GOP finally has a chance the kill the thing, and they refuse to do that. Trump can either continue to enforce the laws in illegal and unconstitutional ways or just completley ignore the law because there is no way to implement it as written. There are no good options there.

  • buddhastalin||

    he knows full well that Democrats aren't going to call him on it

    Maybe not the Congressional Democrats, but Democrat Attorneys General are about to sue him. Time to get used to at least 4 long years of Democrat AGs suing Trump over every one of his bowel movements.

  • BYODB||

    Yeah, that might end up in the Supreme Court but New York and California will need to get in line behind all the other challenges and by the time it gets to them it will almost certainly be moot.

    I don't think the Supreme Court can force Congress to appropriate money, but it wouldn't surprise me if they decide they also have the powers of Congress. I mean, they already try to legislate. It seems spending would be a part of that agenda.

  • buddhastalin||

    The judiciary opining that the legislative and executive branches must spend money is an interesting issue. It comes up at the state level, where a state constitution might require adequate funding of schools, for example. I learned once that injunctions for specific performance in a breach of contract are hard, which is why courts prefer either negative injunctions or else monetary damages. It must be even harder when you are trying to positively enjoin coequal branches of government and the very institutions that are supposed to be enforcing your judgment.

    I used to think that what Congress giveth, Congress can taketh away. But starting (?) with NFIB v. Sebalius, it sounds like Congress can't just taketh away whenever it feels like it. A district court judge has already said that the federal government can't withhold funding from sanctuary cities. The one way ratchet of government spending is getting more entrenched.

  • KennethJohnKelly||

    No, no Judge has said that "the federal government can't withhold money from sanctuary cities". What Judge Leinenweber - and others - ruled is that only Congress can change the terms under which money distributed according to laws it has passed is distributed. Last time I looked, Congress is a part of the federal government.

    http://www.chicagotribune.com/.....story.html

  • BestUsedCarSales||

    Maybe it says something about the quality of the law that insurance companies could possibly sue over being denied payments already deemed unconstitutional.

  • EscherEnigma||

    That's more about how Congress works then the particulars of this, or any, law.

    Generally speaking, Congress can't appropriate multi-year funds. But they can write laws that *entirely* folks to Future payments beyond the current appropriation year.

    So they write a law that says Joe gets fifty bucks a year from Congress for the next ten years, and the first year they appropriate the funds and Joe gets paid. But then Congress changes, and they don't appropriate the funds, and so Joe doesn't get paid. But per the law, Joe is still *entitled* to his $50, so he can sue for it.

    In the end it comes down to Congress, for whatever reason, being unwilling/unable to repeal it change a law that obligates them to make a payment, but still being able to muster the political support to just not pay it, often because of a confluence of "must pass" legislation, rules for passing legislation and so-on.

    So not the fault of the legislation, just a part of our complicated checks and balances.

  • John||

    I do not think that Joe can sue for his money. The obligation created by the law does not trump the prohibition on the government spending money without Congress appropriating it from the treasury.

  • EscherEnigma||

    Half correct. If Congress doesn't pay, but also doesn't repeal or amend the law that obligated them, then they become in violation of the law, opening them up to be sued.

  • Jason Dawes the Elder||

    There is no obligation to pay the funds. The law *authorizes* payment but doesn't require it.

  • BYODB||

    Congress can not bind the hands of future Congress, so I'm pretty damn sure that a Congress that says they're going to pay Joe 50$ every year and Congress decides that's a bad deal the next year they can just give Joe the finger. They might, however, need to do something about the law that says they owe Joe money I.E. gut the ACA like a fish. Oh dear, how terrible.

  • EscherEnigma||

    If they do it properly, they can give Joe the middle finger. The "proper way" being "repeal or amend the law that obligates them".

    If they just refused to pay? Then they're in violation of the law and they most certainly can be sued by someone with standing, sick as someone who has not received owed remittance.

  • MarkLastname||

    You are incorrect. It is the fault of the legislation. The subsidies on the patient side were written to appropriate funds permanently. According to the court ruling, the CSRs are unconstitutional precisely because measures like that require re-appropriation *annually* by congress. It was in violation of the law for Obama to continue paying them without obtaining funds each year from congress; the Trump admin does not need to revise the law to stop paying them; quite the opposite, it must stop paying them (or obtain new approved funding from Congress) to be in accordance with the law.

    It has to do with the rules regarding subsidies like the CSRs because of there highly variable nature from year to year.

  • Quo Usque Tandem||

    Working in health care profession, I have met very very few people who actually pay the full cost of such a plan; much more likely they are either heavily subsidized and pay less than $100 a month or qualify for expanded Medicaid. Bottom line it is costly insurance with high deductibles and copays. Given a choice, I wouldn't buy it [for anything but a very discounted cost] either.

    As for the elimination of CSR subsidies, this article begins with the assumption that those are gone, but then immediately assumes they are not [and therefore poor people with get more of a subsidy as their premium increases, which makes absolutely no sense unless there are some other subsidy that is not being cut off].

  • EscherEnigma||

    If I'm reading right, there's two subsidies: one on the insurer side of things, and one on the civvie side of things. The former is what's being cut off, but not the latter.

    Least, that's what I *think* they're saying.

  • BYODB||

    That is more or less what is being said.

    IF the loss-offset subsidy for the insurerer goes away, than the costs of plans will go up.

    IF the costs of plans go up, since the individual subsidy is tied to rate price, than more people will receive said subsidy.

    IF more people receive that subsidy, more people will be interested in purchasing those plans.

    Of course, none of this actually addresses how solvent or sustainable such a plan is (not very at all since taxes will necessarily go up) but hey MOAR AXXEZZ 2 HALTHCUR!

  • Dizzle||

    But "people" don't "receive" the subsidy in any way except fake numbers on paper. The insurance company receives the actual payment to make up the diff between what you pay and the inflated fake Obamacare price the plan actually costs.

    As many have stated the personal subsidy is just a handout to insurance companies taking money from young healthy people, passing it through old unhealthy peoples hands as a paper/fake subsidy, and eventually giving the real dollars to insurance companies.

    The law then raises costs on plans on both sides by jerryrigging what must and mustn't be provided, adding layers of unnecessary coverage under the guise of "more care", increasing taxes, and several other factors making it more costly to both provide and purchase.

    Then as actual costs continue to rise it claims "savings" for all who qualify for the personal subsidy each year by increasing non subsidized premiums in correlation, each year.

    And after all that, the ins company was getting subsidized again on the backend with these direct payments as incentive to even offer these goofy ass full of waste insurance plans the law mandated.

    Whole thing was a scam and still is. My premiums up nearly 250% on a bronze plan since this crap started. All of that increase is lining highmarks pockets.

  • KennethJohnKelly||

    No, it is not a "fake subsidy". When someone whose income is under 250% of the Federal poverty line buys a silver plan from an ACA Exchange, they get a plan with lower deductibles and out-of-pocket maximums than the standard version of that plan - the lower their income, the lower the deductibles etc. That means that the insurer picks up more of their costs, and then gets reimbursed for the extra money that they spend by the Federal government. If they don't spend any extra money, they get no CSR payments.

  • Quo Usque Tandem||

    "A health care subsidy (cost assistance) lowers the amount you spend on your monthly premium (via advanced premium tax credits) or reduces your out-of-pocket costs for things like copays, coinsurance, deductibles, and out-of-pocket maximums (cost-sharing reduction). Subsidies are "subsidized" by the federal government and are paid for through taxes."

    Three are cost reduction subsidies that the government pays directly to insurers to lower the participants premium; there are tax credits, and there is Medicaid. It is reported that 85% of the 8 million persons who have enrolled in ACA have received help in the form of a subsidy. It these subsidies are no longer available, I can guarantee you they will not buy them.

  • John||

    If you are poor and have few assets, high deductible insurance plans make no sense. They only way such plans will ever be worth the price is if you have a serious illness or accident. But if you are poor, you likely will get such care for free and just never pay the bills. Being poor, you have no assets for the debt collectors to take. Moreover, if you are young, you are unlikely to have such high expenses. Your expenses are likely going to be smaller and you will be paying for nothing.

  • BestUsedCarSales||

    I feel like a lot of this discussion is made worse by a fundamental disagreement of terms. In particular, there are at least two very distinct ways that people use health insurance.

    The first is a form of insurance you pay over time so that you have funding for when expensive medical events occur.

    The second is using it as a gloss for health care.

    Whether this is intellectual dishonestly on some sides part or something, it is still an issue that basically makes all the argumentation incorrect. They are arguing one problem and legislating another. This is probably indicative of most legal issues, but this one is unfortunately a hugely expensive one.

  • John||

    You are making a distinction without difference. You can insure anything, provided that there is a quantifiable risk so that it can be priced. The idea that health insurance that pays 100% of your health costs is not really "insurance" is false. It absolutely is insurance. It is just good insurance.

  • BestUsedCarSales||

    No, there is a significant difference between the two ways people are using the terms. I can have the best insurance in the world, it's not going to help if there are no doctors around. Won't help you if you want a cure for HIV. Health care is the underlying good being sought, insurance is another good that is used as a means to pay for that health care.

    That is the distinction I am making.

  • EscherEnigma||

    Your objection is a couple of decades late.

  • Douglas Proudfoot||

    Insurance is designed to be used to pay for low probability big ticket events, like hospitalization. Because employer provided health insurance is tax deductible to the employer, but not taxable to the employees, health plans became health pre-payment plans which payed for frequent low priced events, like doctor visits. It was a way to compensate employees and avoid taxes. Now everyone thinks the pre-payment part of health insurance is normal, when actually it's the result of a poorly designed tax system.

    For another example of the weird effects of taxes, you can look at very old houses in some parts of Europe. The upper floors jut out over the streets because houses were taxed based on the area occupied by the ground floor.

    It's going to be difficult to change the expectation that good health insurance pays for everything, because it will be impossible to tax health insurance benefits politically.

  • Fuck You - Cut Spending||

    They only way such plans will ever be worth the price is if you have a serious illness or accident.

    That is the entire rationale behind insurance.

    If the entire point was for everybody to get more than they paid for, there would never be such a thing as insurance.

  • John||

    True. But the benefits of the insurance have to outweigh the risks they insure against. And catastrophic plans don't accomplish this for most people

  • ||

    Actually they do. That's the whole point. Insurance isn't supposed to cover mundane small things. It should only cover large RISKS. You get cancer, you break your leg, you have a heart attack. That should all be covered under insurance. Going to the doctor because you have small cold should not.

  • Dizzle||

    This exactly.

    Johns misconception is thinking everyone would always need to use their insurance in a given coverage/billing period. This is probably delineated clearly by age and income, but most younger healthy people like me rarely ever see a doctor or even use insurance, but now were forced to not only pay for it, but pay for a bunch of crap we'd never CHOOSE to cover.

    And hilariously, my "catastrophic coverage" plan from pre aca both cost less a month (roughly 150% less $115 then to $290 now) had a lower deductable (2000 then 2400 now) and a lower doctor visit copay (120 then, 200 now) than my "bronze" ava compliant plan. That one covered dental exam i actually use and potential paternity care for the kids i don't have sure does make up for all that cost increaese though...

  • Dizzle||

    My goof but my plan is and has been a silver plan, not bronze.

  • Heraclitus||

    I agree. This article either misunderstands the ACA or does an extremely poor job of explaining what is going on. Do you think Trump understands it?

  • BYODB||


    There are other wrinkles too: As law professor Nicholas Bagley points out, insurers are likely to sue over lost payments, which this year come to about $7 billion. The payments were not appropriated by Congress, but they are called for in the statute of the health care law, and insurers may well win. Health insurers have already won suits against the government in related cases involving other subsidies built into the law.


    I'm not going to say there's no chance in hell that the Supreme Court will support that contention, but if the Nazgûl want to start not deferring to Congress that could get interesting pretty quick. I don't recall it being written down anywhere that Congress must appropriate money for this or that when that is quite definitely their sole discretion.


    Either way, it would be amusing to watch the Supreme Court order Congress to violate the Constitution. It wouldn't be the first time, after all, as if we needed any more proof that historically we're trapped somewhere between the 1920's and 1950's once again.

  • John||

    It would be nice if Sudderman would link to those cases because I find it hard to believe they are that simple. Congress is divided into two classes, "appropriators" and "authorizers" The committees that authorize things can authorize the government to do about anything they want. If the committees that appropriate the money do not appropriate for that purpose, then the authorizations become a dead letter. That is fiscal law 101. So, I don't see the insurance companies winning here.

  • BYODB||

    My thoughts as well.

  • Jason Dawes the Elder||

    I took a look at his ssrn paper earlier and the only cases cited aren't even in the ballpark. My original intuition was that his claim was bullshit, and the shitty cites reinforced that conclusion.

  • Douglas Proudfoot||

    If the Supreme Court was functioning as intended, there is no way the insurance companies could win. However, the Supreme Court has a habit of deciding what they would like the law to be, rather than what the law is whether they like it or not. Recent Supreme Court cases are like NFL games. On any given day, the Supreme Court could go 5 to 4 either way. Liberal judges reason backwards from their desired outcome to justify the ruling.

    I think the lack of checks on the Supreme Court is a design flaw in the Constitution. I think we need a Convention of the States to fix the problem. I propose that a majority of states' legislatures should be able to pick a minority opinion in any Supreme Court case within 3 years of the decision and overrule the majority decision. This will stop wild liberal justices from poluting the Constitution by interpreting it as a "living document." The choice for the states is limited to minority opinions, so it can't get too wild. It would have to be an obviously bad decision for a majority of the states' legislatures to all vote against it in a 3 year time span.

  • UnrepentantCurmudgeon||

    Please get over the notion that you could have a Convention of States to address a single issue, much less that it would do what you want. There are few ideas worse than a COS.

  • KennethJohnKelly||

    Congress has already appropriated money to pay legal judgments against the Federal government. It's called the "Judgement Fund", and if any insurers sue to get the money the ACA says the government is supposed to pay them, that's where the money will come from.

  • Jason Dawes the Elder||

    The insurers can't sue for something they don't have a right to. "I want the precious" isn't a cognizable claim.

  • KennethJohnKelly||

    The law requires carriers to subsidize the out-of-pocket expenses of low-income individuals who enrol in silver-level QHPs. It also explicitly requires the government to reimburse them for that expense in a "timely" manner. That creates a statutory entitlement. Unless Congress amends the terms of the Judgement fund (which the GOP is considering), the carriers will get their money sooner or later, one way or another.

    https://www.law.cornell.edu/uscode/text/42/18071

  • Memory Hole||

    So taxpayers and the paying consumers of health insurance are fucked and that's Trump's plan? Fuck eveyone a little harder next year.

  • BYODB||

    Was there any realistic scenario where taxpayers were going to be less fucked? No, no there was not. Sadly. Feel free to extrapolate that for the next twenty years.

  • Longtobefree||

    No, that was Obama's plan. Trump is simply forcing the legislators to follow the law.
    Either the dems step up and appropriate a gazillion dollar giveaway to the insurance industry, or they admit guilt to the ponzi scheme and try again.

  • Quo Usque Tandem||

    Either way, "you'll have to pass it to see what's in it."

  • EscherEnigma||

    Nah. That's part of *Reagen's* plan. Folks with insurance have been subsidizing poor people without insurance since the 80s.

  • MarkLastname||

    Since well before the 80s, but ok.

  • Lester224||

    Mostly what it will do is make premiums go up for anyone who has bought individual coverage through O-care. You can argue that this result is just fine.

  • Lester224||

    Bought without the subsidies..

  • Quo Usque Tandem||

    GAO indicates the "85%" of ACA participants receive subsidies. This is born out by my experience working in health care, but I would say it's more like 90%. As insurance it sucks, high cost, high deductibles and high co-pays. No one in their right mind would buy this crap at full cost, and believe me they do not [I did meet one patient who did but only because they had just inherited an estate and were disqualified for the subsidy they started out with before hitting the inheritance jackpot].

    No subsidies, no Obamacare.

  • RightWingA**hole||

    Suderman seems to think that Congress can pass a bill without the President's signature. It can, but only if it has enough votes to override his veto. Maybe that is all Trump meant by "Dems should call me to fix!"

  • Longtobefree||

    Not to mention his executive action to allow real insurance plans outside the exchange handcuffs.
    Now the 6.5 million citizens without insurance but paying "taxes" for not having insurance will have access to coverage that more fits their needs.

  • Memory Hole||

    But those shitty plans will be more expensive to cover the losses from the lack of reimbursement. The paying customer is paying more under Trump's way then if the status quo was maintained.

  • AndyWingall||

    When are they going to get rid of the worst feature of Obamacare--the IRS mandate!!!??

  • BestUsedCarSales||

    That's undermining the system. We already have a perfect system going, why would you want to undermine perfection?

  • magellannh||

    This is a very good analysis by Mr. Suderman and is in stark contrast to a lot of the hyperventilating we're seeing in the rest of the media.

    One nuance he seems to have missed is that state insurance regulators are telling insurers to make up for the lost reimbursements by only raising premiums on silver plans. Premiums on Bronze and Gold plans, which aren't eligible for the cost sharing subsidies, won't be affected by the premium increases.

    So that means that anyone who's unsubsidized and would have to pay the increased premium (eg higher income folks) can avoid the mess just by purchasing a plan with a different metal level.

    One odd side effect of this is that people earning between 250% and 400% of FPL could actually get bigger subsidies and pay less for their insurance. The reason for this is that the premium tax credit amount is tied to the cost of the lowest price silver plan. Assuming the lowest cost silver plan premium increases by 20%, folks could purchase a gold or bronze plan that is shielded from the cost sharing subsidy increase and still get a 20% bigger premium tax credit.

    I think this is why the CBO says the move increases the deficit by $6b. Basically, the feds still have to indirectly pay the cost sharing subsidies, but in the form of premium tax credits. In addition, they pay an extra $6b as a windfall of excess premium tax credit subsidies to people who aren't eligible for the cost sharing subsidies.

  • Quo Usque Tandem||

    Thank you; much better than the article that referenced subsidies in a rather broad manner, without clearly differentiating between CSR payments to insurance companies [subsidies] from tax credits, and calling both of these "subsidies."

  • Memory Hole||

    But if gold and bronze plans aren't eligible for cost subsidies how could folks "purchase a gold or bronze plan... and still get a 20% bigger premium tax credit"?

  • magellannh||

    Obamacare pays two different subsidies to low income people. Some people get one kind, some get both.

    First, people earning below 400% of the federal poverty level get premium tax credit subsidies that reduce/cap their premiums to a maximum percent of their income. These subsidies aren't legally in question.

    In addition, people earning up to 250% of FPL get cost-sharing-subsidies which reduce their out of pocket expenses for deductibles and co-pays. I think the poorest people (133% of FPL - just above the medicaid cutoff) don't have to pay anything for deductibles or co-pays, and their co-pays increase on a sliding scale from their up to 250% of FPL, which is the income cutoff for the cost-sharing subsidies.

  • magellannh||

    I forgot to mention that the premium tax credits are available no matter what metal level plan you get. The amount of tax credit you get is indexed to the cost of a silver plan, but then you can use the money to buy a different metal level plan.

    The cost sharing subsidies are only available to people who buy silver plans. If you're eligible for cost sharing subsidies, you have to buy a silver plan to get them.

  • magellannh||

    Here's a neat resource tracking each state's plan for how they'll handle loss of CSRs

    balloon-juice.com/2017/10/12/csr-wont-be-paid/
    (scroll down to map to see how each state will handle loss of CSRs)

  • KennethJohnKelly||

    Well explained, but one quibble: subsidies are tied to the cost of the second cheapest silver plan, not the cheapest.

  • magellannh||

    Yes. Thanks for catching that. I don't think that changes any of my conclusions though.

  • Douglas Proudfoot||

    Why would anybody believe any prediction the CBO makes? These clowns predicted Obamacare would be a net revenue gain for the federal treasury. That's how Obamacare was able to pass the Senate with less than 60 votes as part of a reconcilement bill. It was an LOL ridiculous prediction! Charitably, the CBO has no idea of what's going to happen in healthcare. Uncharitably, the CBO are the biggest liars in government service since Lyndon Johnson's credibility gap. How can everybody in politics pretend the CBO is gospel when they have such a total BS record when it comes to Obamacare? How are they any more accurate than an Ouija Board or a Magic 8 Ball. At least the Magic 8 Ball occasionally says, "Situation cloudy, try again later." The CBO announces its predictions like they come from the Oracle of Delphi. I think we could get better estimates from the bookies in Las Vegas and it wouldn't cost the government salaries of the people in the CBO. The CBO only seems to exist to block Republican bills and support Democrats' bills. They are a real Emperor's New Clothes group of people. It's time somebody called them on it!

  • flyfishnevada||

    I hate to have to do this but...

    Trump could have held off on stopping the payments assuming Congress would actually repeal and replace and so avoid all the drama.

    All I get from reading this article is that Obamacare is a hot mess. I'd be glad to see it go but after seeing what the GOP is planning we might be better off with the ACA.

  • John B. Egan||

    Let me see if I get this straight. The author is saying by pulling $7 Billion in subsides from Obamacare, MORE people will be insured.. makes sense.. Let's pull all funding of military projects ...Then 'bingo!' we will have more weapons while paying no money!

    You can't be serious.

  • magellannh||

    The thing you missed is that on net, no subsidies are getting pulled. It's a shell game.

    The cost-sharing-reduction (CSR) reimbursements to insurers are getting pulled, but insurers already have made plans for this. Their rate filings included a provision that said if this happens, the premiums on all silver plans will increase by enough to cover the CSRs.

    But the thing is, as it currently stands, 85% of the premiums paid on silver plans are paid by the US government in the form of premium tax credits. So the 20% premium increase, to cover the lost CSR reimbursements, gets paid by (drum roll) UNCLE SAM.

  • magellannh||

    " 85% of the premiums paid on silver plans are paid by the US government in the form of premium tax credits."

    Actually, what I said there isn't entirely accurate and glosses over some details.

    However, the last part is still true. Next year, only subsidized people will buy a silver plan because they'll be very expensive compared to everything else unless the government is paying for it. So that means the government will pay the full amount of the CSR subsidies next year, but in the form of premium tax credits.

  • TheOriginalDaveH||

    "With this move, Trump brings the administration of Obamacare into constitutional compliance".
    Oh come on, Peter. There is nothing remotely Constitutional about the Federal Government involving itself in our healthcare decisions.
    This is why I get my information from the real Libertarians at Mises Institute.

  • ranrod||

    BULL****

    Folks, even the most cursory research shows immediately that Trump is and always has been fully in favor of so-called "universal" or "single-payer" healthcare. These psychopathic fools have no intention of ever undoing Obamacare – only making it worse.
    I'm sorry, but if you were dumb enough to think that Trump or the congress would ever, ever, ever unwind the biggest racketeering matrix in human history, you deserve what you get. Keep writin' those quarterly tax checks! I'm sure if the Republicans can just pick up a few more seats… OH. WAIT.

    http://www.barnhardt.biz/2017/03/25/back-to-work/

  • Sevo||

    ranrod
    BULLSHIT!

  • AngelaM||

    How reassuring, in 2018, a million fewer people will have coverage but by 2026, those million or their equivalent will once again have coverage. No problem- except for the million people who lose their coverage and postpone treatment or diagnosis of conditions that kill them before 2026 when, if they are lucky, they might again be covered. But hey legal arguments should trump the lives of real people. What a farcical argument. In the long run things may even out. In the short run real people die.

  • Sevo||

    Angela,
    It's always a pleasure to hear from lefty ignoramuses who presume that appeals to emotion are the proper approach.
    Angela, fuck off, slaver.

  • Devastator||

    You fuck off Sevo. If you can't debate and just shout names, then you get the fuck out.

  • RodgerMitchell||

    Suderman thinks federal finances are like state and local government finances. He is clueless about the difference.

    Briefly, the federal government is Monetarily Sovereign and the states are not. While the states use tax dollars to pay their bills, the federal government creates new dollars, every time it pays a bill.

    Thus, while state and local governments can run short of dollars, the federal government cannot. Even if the federal government collected $0 taxes, it could continue paying its bills, forever.

    For that reason, while a deficit is a burden on state and local governments, it is no burden at all on the federal government. Finally, while state and local government taxpayers DO pay for state and local spending, federal taxpayers DO NOT pay for federal spending.

    On second thought, I suspect Suderman knows this, but simply is spreading the BS to convince his readers that social spending is "unsustainable" (a favorite word of libertarians).

  • XM||

    We all know the feds can print or borrow money endlessly. It doesn't save them from things like inflation.

    The deficits driven by entitlement spending isn't something that can magically disappear because something like bitcoin can never challenge the "sovereignty" of our monetary policy. Otherwise the feds might as well hand me a min income of 50 thousand a year. "That's ok we'll NEVER run out of money!"

  • Sevo||

    RodgerMitchell|10.13.17 @ 10:51PM|#
    "On second thought, I suspect Suderman knows this, but simply is spreading the BS to convince his readers that social spending is "unsustainable" (a favorite word of libertarians)."
    No one here is confused on that issue; I suspect you're a lefty ignoramus who thinks it's just fine that the fed gov can. And hopes that someone might think you had some sense by pointing that out.
    Fail.

  • Sevo||

    ..."They are paid directly to insurers, and they provide extra financial for individuals..."
    One of the reasons Reason gets $0.00 dollars from me; none was ever paid to an editor.

  • swampwiz||

    It's time for a final solution to the ObamaRomneyHeritageCare question: MediSomething-For-All.

  • Sevo||

    Do you find it necessary to lie every time you post?
    That canard regarding Heritage has been debunked often enough that even lefty assholes like you should have gotten the message. EVEN ignoramuses like YOU.
    Did you miss it in your inbox, or are you just willing to ignore facts like most lefties?

  • seahorsedan||

    SCUUUSE me, I am not a SCOTUS justice. This funding dilemma came up last May. My position is and has been since Hillary care went down in flames in '94 the following.
    How can so many people believe that the SCOTUS ruling that allowed the Obama Administration one more excuse to tax the American people somehow made universal healthcare a right? That decision allows the federal government to force Americans to buy a product they may not want or choose or can afford that has only periphery relationship to health care at best. Insurance companies can not even dispense aspirin. We demand HEALTH care, not some pie in the sky insurance maze of legal mumbo jumbo. It should not be a straight up partisan cat fight. How come the smartest people in the wealthiest country in the history of the world can't figure out how to work out a single payer system wherein it's sick, injured or infirm citizens get medical treatment as needed without a middle man getting his pound of flesh first? i.e. single payer, citizens first, all others take a number. CC you own posts to your own federal senators and representatives. Keep it civil. We own a rover on Mars for cryin' out loud but can't see a doctor on Earth. Go figure.

  • RenaD||

    Fuck the ACA, in whatever form.

    I just got a notice from my insurance company that my rates are nearly doubling. Starting January my shitty $366 policy shoots up to $668 a month.

    I'm canceling. I can get a hell of a lot of health care for way under $8,100 a year.

  • Devastator||

    The author of this article is living in a dream world. Insurance is high in the USA because medical care is double to triple what it is in even highly regulated European markets. The poor will never get adequate health care in the USA and will just have to buck up and quit being fat and smoking like freight trains. That's just part of the cost of a free market economy. You can't shop around for medical care while you're having a heart attack. You shop around for TVs. As much as I love the free market it is a poor fit to medical care, except for preventive care and care that does not require immediate attention, which is NOT most of the more expensive procedures like end of life and emergency situations. Libertarianism isn't a panacea.

  • SDN||

    "This is not Trump's to "fix." It is a decision for Congress and Congress alone. "

    Gee, Peter, did they amend the Constitution when I wasn't looking to disallow the Presidential veto because TRUMP!!!!

    It would certainly be consistent with all the other NeverTrump nonsense spewed by you sore losers.

  • lfstevens||

    Trump is playing the hand Obama dealt him. Cutting the payments isn't a return to operating under the law, although that's a nice side-benefit. It's a negotiating tactic to increase pressure on Dems to deal.

  • DominoQQ||

    BandarQ 2018
    Bandar Sakong 2018

    This is the comment you post on a picture that everyone else commented on at least six months ago. Typically, this comment is just blatant proof that you've been doing some facebook stalking.

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