Thanks to Trump, insurance premiums will jump for many in 2018

Apologies for two posts in a row about this (with a gap of time between them; I’ve been a bit ill), but it appears that Trump’s efforts to undermine the Affordable Care Act are leading to a large jump in insurance costs next year in several states, though the great majority of people won’t see their rates increase at all. The difference will be covered by taxpayers and by families making over 400 percent of the poverty line.

Briefly, here’s what’s going on:

Under the Affordable Care Act (Obamacare), lower-income working people who get individual or family policies through the exchanges can qualify for reduced co-insurance and copays, provided they pay for at least a Silver-level insurance policy. Under the law, insurance companies have to give these discounts, and in return the law requires the federal government to reimburse the companies. These reimbursements are called “cost-sharing reduction payments.”

The Trump administration has been threatening to stop making these payments, justifying that by saying the ACA doesn’t explicitly allocate funds for them. That is, it requires that the payments be made, but it doesn’t contain additional, separate language saying the payments can be made. This is an arcane legal argument and at worse may represent a wording error, but the intent of Congress to authorize and require the payments is clear. Moreover, members of both parties, including Republican critics of Obamacare, have made clear they want to payments to continue, but so far Congress hasn’t acted to make clear that the administration must keep making the payments.

If the administration does follow through on its threats, then the insurance companies will still be required to make the payments, but the money will have to come from somewhere. In order to have enough funds, companies in several states are sharply raising premiums next year, and they’ve made it clear that this is the reason.

About 80 percent of people with individual policies get subsidies to help pay the premiums. The amount of the subsidy is computed by subtracting a percentage of their income from the cost of the second-least-expensive Silver insurance policy available in their area. If the premium for that policy rises, the subsidy rises along with it so their cost for the policy never exceeds that percentage of their income.

But if they make more than 400 percent of the poverty line, they get no subsidy at all. (In my opinion this is dumb and ought to be changed to a tapering of the subsidy, not a sharp cutoff.)

So roughly 20 percent of people buying policies on the individual market will see a major price increase next year caused by the Trump administration. Of course, the administration hopes the public won’t realize this and will believe twaddle about how Obamacare is supposedly “imploding.” In fact, the administration and its allies in Congress are flat out lying about this.

For more on this see Ed Kilgore’s piece here. See also these two earlier posts from this blog:

Trump is still undermining Obamacare (October 3)

How the Trump administration is still trying to sabotage Obamacare (September 2)

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