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President Trump continued to chip away at the Affordable Care Act by ending subsidies to health insurance companies that help pay deductibles, co-payments and out-of-pocket charges for lower-income Americans. Judy Woodruff speaks with Julie Rovner of Kaiser Health News to make sense of the president’s move, which many experts say could destabilize the health care marketplace.
The president's decision to stop paying subsidies to health insurers was his second direct blow in one day at the law that has come to be known as Obamacare.
The payments are made directly to insurance companies, which, in turn, use that money to reduce costs for lower-income Americans. The money helps pay for deductibles, for co-payments and out-of-pocket charges. Depending on a individual's income level, the subsidies have lowered costs by, on average, $1,000 a person, but they can range anywhere from $700 to more than $3,300 a person.
The subsidies were first challenged by a lawsuit from congressional Republicans in 2014. A federal judge agreed, pointing out that the money had not been formally appropriated by Congress.
Still, payments have continued while this legal case was being appealed.
Julie Rovner of Kaiser Health News joins me now to look at what the president's move means.
Julie, welcome back to the program.
JULIE ROVNER, Kaiser Health News:
Nice to be here.
So, just remind us, clarify for us who, what was getting these subsidies and why.
Well, there are two kinds of subsidies in the Affordable Care Act. People up to four times poverty level get help paying their premiums.
But for people who are up to 2.5 times the poverty level — it's about $30,000 for an individual — they get — in addition to the help paying the premiums, they get these helps for out-of-pocket costs, on the theory that, even if they could afford the premium, they might not be able to afford to go and actually get coverage.
It's about seven million people of the roughly 10 million people who buy on the health insurance exchanges. So, it's a majority of those people, and actually they will continue to get these subsidies.
But you were saying to me a little while ago, it's important to point out, again, when you say 400 percent of the poverty level, these are people who are earning in a range of what around the country?
For a couple, it's about $64,000. Those are the people who are getting help with their premiums.
To get help with these cost-sharing subsidies, you would have to learn substantially less. Per couple, it would be about $40,000.
So, let's talk about the potential impact here.
What about first on the health insurance companies?
Well, this is where it's really going to come home, that, right now, the insurance companies are required under their contracts and by the law to provide these subsidies to these low-income people, to provide the cost-sharing subsidies.
There's the questions, as we have seen with the lawsuit, about whether or not Congress formally appropriated the money, but, as many lawyers have pointed out, the fact — whether or not Congress appropriated it, the law says the insurance companies will provide it to the individuals, and that the federal government will pay back the insurance companies.
So it's money that's owed. Congress — the easy way to solve it would be for Congress to appropriate the money.
And these insurance companies — there is some dispute about what that means for these insurance companies.
Well, there's a number of things the insurance companies can do. The president telegraphed from the very beginning of his administration that he might stop paying these. For a while, it was every month we were sort of waiting to see, would he pay them the next month?
For a while, he was paying them, waiting to see if Congress was actually going to repeal and replace the Affordable Care Act. And they didn't.
And so companies have mostly built into their premiums for next year. Remember, open enrollment starts in about two-and-a-half weeks — they have built in not getting these subsidies. But it's not true of every company. It's not true of every state. So it's going to be a very mixed bag.
They can also sue. They can go to court and say, you owe us this money. And they might be able to get it. And others have sued on their behalf.
So, that's something that is out there and we can't predict at this moment.
So, consumers, bottom line, Julie, what does this mean for people who have been receiving these benefits?
Well, there is a lot of confusion about this.
Not paying the subsidies, as the president pointed out, doesn't mean that the people who are getting them now won't get them. If insurance companies pull out — and they can do that — that's in most of their contracts that if these don't get paid, they can pull out — then nobody would get coverage.
But if insurers stay, then the people who are getting the subsidies will continue to get them. The people who will pay are the people who aren't getting help paying their premiums, the people who earn more than four times the poverty line.
It's about another — a different seven million people. They will be basically asked to pay these entire premium increases, because they're not getting help.
I think that's an outcome of this that I think a lot of people have not focused on.
So, let's talk about the cost to the government. I mean, on its face, you would think, oh, well, they're stopping the subsidies; that means the government is going to save a lot of money.
But you were telling us it's not that simple.
What's ironic is that this will cost the federal government more money, according to the Congressional Budget Office, because what happens is that insurers will raise their premiums. When they raise premiums, remember, the premium subsidy comes in. Those premium subsidies will go up to match the increases in premiums.
So people who are getting help won't see these increases. As I just mentioned, the people who aren't getting help, the people who are paying their entire premiums themselves, they will be asked to pay more. But the government will also be asked to pay more.
Julie, stepping back, look at the overall health care marketplace. How much is this expected to impact that?
Well, this — it's a relatively small piece. It's about 17 million people in the individual market out of, what, 330 million Americans.
But even people who represent employer plans were complaining today that this could end up affecting them. If there are fewer people with insurance or people who couldn't pay their out-of-pocket costs, that that — that providers would pass those along to people with employer insurance, that there are ways that this could have a ripple effect, probably not a big one. But it could impact the rest of the health insurance market.
And, finally, the president's done this. I mean, he's made this move.
Could Congress in any way step in and change…
All Congress needs to do is appropriate the money. And there's been discussions in Congress really since the last repeal and replace failed to do that, to pay that money for a couple of years. It's a bipartisan effort.
The administration has signaled today that they might not even accept that if Congress were be able to come to a bipartisan decision to do this, that they might want to get more in order for the president to accept that.
Well, it's one more step in a story that I feel has just gone back for eons. It's only been a few years, but it's gone back for a long time, yet another wrinkle today.
Julie Rovner, thank you very much.
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