Obamacare's gross premiums would rise by an average of 20 percent next year and 25 percent by 2020 if President Trump cuts off payments to insurers, according to an analysis released Tuesday by the Congressional Budget Office.
The number of people who are uninsured would increase next year by 1 million, as insurers leave the exchanges, but then beginning in 2020 the number would be about 1 million lower than under current law because more people would qualify for another kind of federal subsidy, which pays for premiums, and would therefore be more likely to buy coverage, said the analysis by the CBO and Joint Committee on Taxation.
Trump has said he would consider cutting off the payments, called cost-sharing reduction subsidies, as a way to bring Democrats and Republicans together to negotiate a healthcare deal. After failing to pass a bill that would repeal and replace portions of Obamacare, a handful of senators said they believed the funds should be appropriated through Congress and that they should move to do so when they return from their August recess.
If they don't come to a consensus, the CBO projected, the federal deficit would increase by $194 billion from 2017 to 2026.
The funds help insurers reduce out-of-pocket prices to low-income consumers who use Obamacare's exchanges. Insurers are required by law to offer them to customers who buy the plans, so if the companies don't receive help from the federal government they would look to recoup costs by raising premiums.
Most people who buy coverage on the exchanges receive subsidies, so they wouldn't personally feel the effect of rising premiums, but the federal government would have to pay more to make up the increases. Even more people would qualify for subsidies because they kick in when prices are roughly 9.5 percent of a person's income depending on income level.
Insurers in some states created exit clauses to get out of contracts in case the subsidies are cut off, and some of them would be able to drop policies in a matter of months. CBO estimates that cutting off the funds would cause about 5 percent of customers to face the prospect of having no insurer to buy coverage from.
A legal battle centers on how the subsidies were allocated under the Obama administration, spurring a lawsuit in 2014 by House Republicans who said the move was illegal because they needed to be appropriated through Congress. A federal judge agreed, and the case was appealed by the Obama administration as the payments continued to be made. Because states recently have joined the legal battle, the Trump administration can no longer drop the appeal, but it can discontinue funding.
Democrats quickly pounced on the report, noting that the Trump administration would be to blame if premiums were increased because of the failure to make the payments.
"Try to wriggle out of his responsibilities as he might, the CBO report makes clear that if President Trump refuses to make these payments, he will be responsible for American families paying more for less care," said Senate Minority Leader Chuck Schumer in a statement.
Minority Leader Nancy Pelosi, D-Calif., said the CBO's analysis "once again exposes the vast cynicism of President Trump's threats to purposefully raise Americans' health costs by cutting off cost sharing reduction payments."
Pelosi said if Trump refuses to fund the CSR payments he will be "singlehandedly responsible for raising premiums across America by 25 percent, exploding the deficit by nearly $200 billion, and creating more bare counties."