President Trump acting solo this week, has made significant changes to Obamacare, aka The Affordable Care Act.
Obamacare: Trump Goes Solo
Frustrated by Congress’ futility to “repeal and replace”, the White House announced it would stop key subsidy payments to insurers. Earlier, Trump signed an executive order giving people who buy their own insurance access to alternative health plans. These plans were limited under the ACA rules set by the Obama administration.
“This is promoting health care choice and competition all across the United States,” Trump said at the signing ceremony. “This is going to be something that millions and millions of people will be signing up for, and they’re going to be very happy.”
Obamacare: Trumps’ Changes
The subsidy payments, known as “cost-sharing reductions,” are payments to insurers to reimburse them for discounts they give policyholders with incomes under 250 percent of the federal poverty line, or about $30,000 in income a year for an individual. Those discounts shield these lower-income customers from out-of-pocket expenses, such as deductibles or copayments. These subsidies have been the subject of a lawsuit that is ongoing.
The cost-sharing reductions are separate from the tax credit subsidies that help millions of people pay their premiums. Those are not affected by Trump’s decision.
Obamacare: How Trumps Action Affects ACA Customers
Cutting off payments to insurers for the out-of-pocket discounts they provide to moderate-income policyholders does not mean those people will no longer get help. The law, and insurance company contracts with the federal government, require those discounts to be granted.
That means insurance companies will have to figure out how to recover the money they were promised. They could raise premiums,and many are raising them already. For the majority of people who get the separate subsidies to help pay their premiums, those increases will be borne by the federal government. Those who will be hit hardest are the roughly 7.5 million people who buy their own individual insurance but earn too much to get federal premium help.
Congress inaction and their futility to repeal and replace Obamacare pushed President Trump to take action. Premiums had continued to skyrocket, making the Affordable Care Act unaffordable. In the short term, premiums should go lower.