Under the ACA, people who earn less than 400 percent of the poverty level receive tax credits that cap their premium payments at a certain percentage of their income. Trump can’t touch those premiums without passing legislation.
http://nymag.com/daily/intelligencer/20 ... =feed-part
Cost-sharing reductions, by contrast, are provided to insurers — not consumers. Obamacare requires insurers to offer discounted rates on silver-level exchange plans (the second-highest-cost coverage package) to low- and moderate-income people (those who make 250 percent of the federal poverty level or less). The law then stipulates that the federal government will reimburse insurers for the cost of providing those discounts. But since it was impossible to know exactly how many nonaffluent people would sign up for silver plans — and thus, to predict how much the government would owe insurers — the ACA did not appropriate a specific amount of money for reimbursing them. It just made an open-ended guarantee.
House Republicans claimed that this fact rendered the payments illegal. The Constitution says that “[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” But Congress never formally appropriated the $7 billion in reimbursements to insurers that the Treasury paid out last year. The GOP sued the Obama administration. A federal judge ruled in their favor — but allowed the White House to keep making payments while it appealed the decision to a higher court.
This is what gave Trump the unilateral power to cancel the payments. The minute his administration gives up on appeal, the cost-sharing reductions stop flowing. But here’s the crucial thing: Insurers are still required to give low-income people the discounts. Trump can’t change that regulatory requirement without passing a law. All he can do is stiff the insurers. (And according to health-care economist Nicholas Bagley, he can only do that temporarily. Insurers still have a legal entitlement to reimbursement — even if the Treasury can’t legally honor that entitlement without congressional consent. So, the insurers can sue the government and collect what they’re owed through a special fund dedicated to settling Uncle Sam’s lawsuits.)
For insurers, this drastically increases the (near-term) costs of participating in Obamacare. In response, some will exit the exchanges, while others will jack up the premiums on their silver-level plans by roughly 20 percent, according to the CBO. This is the part of Trump’s sabotage that will hurt some ordinary people: It’s possible that insurers will completely abandon some counties, and that people who earn too much to qualify for subsidies — but don’t get insurance through their employer — will see their health-care costs increase. While the CBO expects the cancellation of the cost-sharing reductions to (ironically) give more Americans insurance in the long-term, the budget office expects it to result in fewer Americans having insurance next year, amid these marketplace disruptions.
That said, the vast majority of people who use Obamacare do qualify for subsidies. And those subsidies are tied to the price of silver-level plans. Which is to say: The more expensive silver plans get, the bigger most Obamacare enrollees’ subsidies become. If you are an ACA enrollee who makes 200 percent of the poverty line, the law guarantees you a tax credit big enough to lower the cost of a silver-level plan to 6.43 percent of your annual income — no matter how expensive the silver plan gets. Critically, while the size of the tax credit is tied to the silver plan, enrollees can spend that credit on gold- or bronze-level ones, if they so choose.
The article gets most things right, but gets some critical details wrong.
First, Obamacare gave HHS the responsibility to manage the individual market, and the responsibility to ensure they had enough money to make subsidy payments to insurers. The 'they can't know how many people will sign up' argument is a copout. Obamacare has mechanisms to help them learn (the 3 R's program), they just haven't been able to figure it out. Part of it is that the Obama administration undermined the individual market on several occasions, the other part is that HHS wasn't up to the task for a lot of reasons. IMHO this is the biggest argument against single payer-- a single payer system requires a high functioning health care bureaucracy and politicians who let the bureaucracy do its job. We have neither.
The second thing is that the author misses a key point in how the individual market works. What it does is it ties the non-subsidy receiving individual market to the subsidy receiving individual market into the same risk pool. Very few people in the individual market who don't qualify for subsidies buy from the Obamacare individual market. The people in the individual market who keep their policies all year tend to fall into two categories: sick people, and people who don't get subsidies. The people in the Obamacare individual market tend to stay about five months. Insurers know this and price accordingly-- it's a big reason prices keep going up.
For those of you in the individual market who don't receive subsidies, I recommend starting the conversation with your licensed insurance broker now.