WASHINGTON – Counting down to a budget deadline, the White House has toyed with a hardball health care tactic to force Democrats to yield on President Donald Trump’s priorities.
The administration just might eliminate billions of dollars in disputed “Obamacare” subsidies.
But a study out Tuesday from a nonpartisan group suggests that could backfire. Stopping the Affordable Care Act payments at issue may actually wind up costing the federal government billions more than it would save.
The Kaiser Family Foundation found that taxpayers would end up paying 23 percent more than the potential savings from eliminating the health law’s “cost-sharing” subsidies, which help low-income people with insurance deductibles and copayments.
It works out to an estimated $2.3 billion more in 2018, or an additional $31 billion over 10 years.
How’s that possible? The short answer is that insurers would still be free to raise premiums, driving federal spending even higher because premiums are also subsidized under a different provision of the program. “You end up with a counter-intuitive result,” said Larry Levitt, one of the study’s authors.
Former Congressional Budget Office director Douglas Holtz-Eakin, a Republican economist, reviewed the Kaiser study for The Associated Press and concurred. “I think this may even be a conservative estimate,” he said. “It says what’s at stake: double-digit premium increases and more money out of the Treasury, not less.”
An earlier study from Covered California, the health insurance marketplace in the nation’s most populous state, reached similar conclusions.
The cost-sharing subsidies amount to about $7 billion this year. Provided to low-income customers who buy a silver-level plan, the assistance can reduce deductibles of several thousand dollars to just a couple of hundred. About 3 in 5 consumers on HealthCare.gov and state marketplaces qualify. The cost-sharing help is provided directly by insurers, who are reimbursed by the government.
The money is under a legal cloud because of a federal judge’s ruling in a lawsuit by House Republicans against the Obama administration.
The judge agreed with GOP lawmakers that the health law lacked a specific congressional appropriation for the subsidies, meaning that spending the money would violate the…