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Trump is Ending a Big Obamacare Payment. What Does it Mean?

The move is considered to be a major blow to Obamacare.

The Affordable Care Act

News leaked out of the White House on Thursday that President Trump plans to stop making cost-sharing reduction (CSR) payments to health insurers, a key component of Obamacare.

Here are NTK Network’s answers to questions you may have about this latest move by President Trump to undercut and dismantle President Obama’s signature legislative achievement.

WHY IS TRUMP DOING THIS?

Trump is cutting off CSR payments because, according to Press Secretary Sarah Huckabee Sanders, the federal government has no legal right to make them:

“Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare,” [Sanders] said. “In light of this analysis, the Government cannot lawfully make the cost-sharing reduction payments. …The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system.”

WHAT ARE “CSR PAYMENTS”?

According to HealthCare.gov:

A discount that lowers the amount you have to pay for deductibles, copayments, and coinsurance. In the Health Insurance Marketplace, cost-sharing reductions are often called “extra savings.”

HOW MUCH DO THEY COST?

About $7 billion each year. That’s roughly one-tenth of one percent of the federal budget.

WHAT WILL THIS DO TO PREMIUMS?

It will raise premiums, according to the Congressional Budget Office (CBO):

According to CBO and JCT’s projections, for single policyholders, gross premiums (that is, before premium tax credits are accounted for) for silver plans offered through the marketplaces would, on average, rise by about 20 percent in 2018 relative to the amount in CBO’s March 2016 baseline and rise slightly more in later years. Such premiums for other plans would rise a few percent during the next two years, on average, above the increases already projected in the baseline in response to uncertainty among states and insurers about how to respond under the policy. In later years, the agencies anticipate, premiums for other plans would not generally rise above baseline projections because CSRs are not available for those plans.

HOW DO DEMOCRATS FEEL?

Surprise! They don’t like it.

President Trump offered, via Twitter on Friday morning, to work with Democrats on a legislative fix.