Budget Office says sharp increase in premiums, government deficit if Obamacare subsidies end
WASHINGTON — If President Donald Trump terminates insurers’ cost-sharing subsidies to force the collapse of Obamacare, health insurance premiums will sharply rise along with the federal deficit.
That was the glum analysis released Tuesday by the nonpartisan Congressional Budget Office.
The subsidies expire at the end of the year unless the government continues paying them to insurance companies that reduce deductibles and co-payments to Americans who cannot afford the out-of-pocket expenses.
If that happens, the budget office estimated premiums to individuals who buy insurance on the Obamacare exchanges would rise by 20 to 25 percent next year, and that the federal deficit would increase by $194 billion over the next decade.
Trump has not committed to continuing the subsidies despite concerns that ending them would destabilize insurance markets serving millions of lower-income Americans. He has predicted the collapse of Obamacare if Congress doesn’t pass a law to repeal and replace it.
The budget office analysis indicated Trump’s decision is crucial to what happens.
It said some insurance companies would drop out of the insurance exchanges without the subsidies and those that remained would be forced to hike their premiums to cover the loss of deductible and co-payment subsidies.
Furthermore, the budget office said, most individuals would likely not pay the higher cost because Obamacare also provides government subsidies to help pay the cost of premiums, causing the overall expense for subsidies to soar.
The budget office said the net result would increase the federal deficit by about $20 billion per year through 2026.