For now, the President will permit the latest installment of insurance cost-sharing subsidies through the Affordable Care Act. That is important for now, because the Congressional Budget Office (CBO) has determined there would be significant problems in insurance coverage and significant costs to the federal government if the President pursues his threat to cut off funding.
CBO indicated in The Effects of Terminating Payments for Cost-Sharing Reductions, that
“insurers in some states would withdraw from or not enter the nongroup market because of substantial uncertainty about the effects of the policy on average health care costs for people purchasing plans. In the agencies’ estimation, under the policy, about 5 percent of people live in areas that would have no insurers in the nongroup market in 2018.”
But it will also drive up costs for the federal government because for some individuals who do not lose or drop coverage, the federal government will make up part of the costs through higher federal tax credits.“Implementing the policy would increase the federal deficit, on net, by $194 billion from 2017 through 2026, CBO and JCT estimate. Total federal subsidies for health insurance in the nongroup market—in particular, the sum of the premium tax credits and the CSR payments—would increase for two reasons: The average amount of subsidy per person would be greater, and more people would receive subsidies in most years. “
