The U.S. government’s costs could increase by $2.3 billion in 2018 if Congress and President Donald Trump decide not to fund Obamacare-related payments to health insurers, according to a study released today by the Kaiser Family Foundation.
The Kaiser study said ending the payments would cause insurers to “face significant revenue shortfalls this year and next year.”
“Extrapolating to the 10-year budget window (2018-2027) using CBO’s projection of CSR payments, the federal government would end up spending $31 billion more if the payments end,” the study said.
Insurers who stay in the ObamaCare exchanges are likely to up their premiums to compensate for losing the CSR payments. This, in turn, would increase the government’s tax credits, according to the study.
“The increased tax credits would completely cover the increased premium for subsidized enrollees covered through the benchmark plan and cushion the effect for enrollees signed up for more expensive silver plans,” Kaiser said in its study.
Trump had threatened to withhold the payments to force Democrats to the negotiating table on a health care bill to replace Obamacare. He has also said he will fund the subsidies if Democrats agree to fund for his proposed border wall with Mexico as part of efforts to pass a government funding bill this week and avert a shutdown. Democrats have rejected the conditional offer.
The projection assumes that insurers remain in the marketplace next year. Health policy experts have said without the payments, many insurers could not afford to stay in the market and will likely exit, which would leave some U.S. counties without an insurer.
Aetna (AET.N), UnitedHealth Group Inc (UNH.N) and Humana (HUM.N) have already exited most state exchanges for 2017 and said they will do so next year as well.