CBO predicts rise in deficit if Trump cuts payments to insurance companies

August 15, 2017

CBO predicts rise in deficit if Trump cuts payments to insurance companies


On Wednesday, the White House said it would continue what's known as cost-sharing reduction payments to insurers for another month, buying President Trump some time to decide whether he'll continue the payments long-term or cut them off altogether.

The announcement came a day after the Congressional Budget Office released an analysis that found that ending the payments would increase the deficit by $194 billion over 10 years.

The cost is "eye-poppingly large," says IHPI member Nicholas Bagley, a professor of health law at U-M. "This single policy could effectively end up costing 20 percent of the entire bill of the ACA."

Under the Affordable Care Act, the federal government reimburses insurance companies for the discounts on copays and deductibles they're required by law to give to low-income customers.

Trump threatened repeatedly to cut off the payments, which he has called "bailouts," during the unsuccessful effort by Senate Republicans to repeal and replace the Affordable Care Act, also known as Obamacare.

More recently, the president has remained mute on the topic, and insurers have been left to wonder, month-to-month, whether they will continue to receive the payments. On Wednesday, a White House spokesman said the administration will reimburse insurers for this month's discounts next week. Future payments remain in question.

Bagley says there is no good policy reason to cut off the payments. "If you can cover roughly the same number of people for about $200 billion less, why wouldn't you want to do that?" he asks.

Featured IHPI Members