CBO finds that politically motivated sabotage of Affordable Care Act would increase premiums and federal deficit

RALEIGH (August 15, 2017) — Today the Congressional Budget Office released a report on the effects of terminating payments to insurers for cost-sharing reduction (CSR) subsidies under the Affordable Care Act, an action that the Trump administration has repeatedly threatened in order to deliberately sabotage the law. While intended as an act of political sabotage, nonpayment of CSRs would have real consequences for people—not just politicians and political polls.

CBO found that terminating payments for cost-sharing reductions would:

  • Increase premiums next year by 20 percent, as insurers charge consumers higher premiums to make up for the lost federal funding. Premiums would rise by 25 percent in 2020 compared to CBO’s baseline.
  • Increase the federal deficit by $194 billion through inefficient spending, as cutting off CSR payments will require the federal government to spend more on premium tax credits to offset the premium increases for those who qualify for subsidies.
  • Drive insurance companies out of some markets, leaving 5 percent of the population without access to any nongroup insurance plans. CBO estimates that 1 million Americans would lose coverage in 2018 due to lacking any insurance carriers in their markets.

“Through this deliberate act of sabotage, the Trump administration is purposely driving up North Carolinians’ premiums,” said Brendan Riley, policy analyst for the Health Advocacy Project of the North Carolina Justice Center. “Today’s report reiterates much of what we had already heard from insurance companies throughout the country and here in our state.”

Earlier this month, Blue Cross Blue Shield of North Carolina announced it was seeking a premium increase of 14.1 percent for its individual market plans next year. That is the amount that the company must raise its premiums in order to offset financial losses if the Trump administration decides not to pay them. In other words, Blue Cross Blue Shield would not increase next year’s premiums at all if not for the Trump administration’s actions.

“Congress must act immediately to appropriate funds for the cost-sharing reductions,” Riley said.

FOR MORE INFORMATION, CONTACT Brendan Riley, brendan@ncjustice.org, 919.861.2074; Julia Hawes, julia@ncjustice.org, 919.863.2406.