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Obamacare premiums to soar 20% if Trump ends key Obamacare subsidies, CBO says

Posted August 15

Insurers would hike premiums on Obamacare silver plans by 20% next year if President Trump stops funding a key set of subsidies, according to a Congressional Budget Office report released Tuesday.

The agency's projection, which based it estimates on how premiums would compare to current law, is in line with other analyses that looked at what would happen if Trump follows through on his threats to cease the payments for the cost-sharing subsidies.

The cost-sharing reduction payments go directly to insurers to reimburse them for reducing deductibles and co-pays for lower income enrollees. They are only available to people who buy silver-level plans on the Obamacare exchanges.

They are the subject of a court battle between the House of Representatives and the Trump administration, which inherited the case from the Obama administration. Trump has tried to use subsidies as a bargaining chip, first to get Democrats to the table and more recently to spur the Senate to return to its effort to repeal and replace the law.

Related: Trump-fueled uncertainty spurs Obamacare insurers to leave, hike premiums

Rates for silver plans would increase slightly more after 2018, according to CBO. Premiums for other plans would rise a few percentage points during the next two years because of uncertainty surrounding the policy change, though they would settle down in line with previous projections in later years.

Eliminating the subsidies would also increase the deficit by $26 billion in 2026.

Though there have been signs that Obamacare is stabilizing, the Republican drive to dismantle the health care law has left insurers very jittery. In particular, they want assurances that the cost-sharing subsidies will be funded through 2018.

Without that promise, many are hiking their rates. Insurers that assumed the cost-sharing subsidy payments would be discontinued added between 2% and 23% to their premium requests for next year, according to a Kaiser Family Foundation survey of 21 major cities released last week.

Related: Anthem pulls out of Virginia's Obamacare exchange

Other insurers aren't waiting around to find out. Anthem is among the most recent to downsize its presence, announcing last week it was pulling out of Nevada and Virginia, while cutting its participation in Georgia nearly in half.

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