CBO Analysis Finds That Ending Reimbursements To Insurers Will Raise The Deficit : Shots - Health News The Congressional Budget Office estimates that ending what's known as cost-sharing reduction payments to insurers will raise the deficit $194 billion over 10 years.
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CBO Predicts Rise In Deficit If Trump Cuts Payments To Insurance Companies

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CBO Predicts Rise In Deficit If Trump Cuts Payments To Insurance Companies

CBO Predicts Rise In Deficit If Trump Cuts Payments To Insurance Companies

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AUDIE CORNISH, HOST:

The Congressional Budget Office has weighed in on a health care proposal floated by President Trump. He's been threatening to cut off payments the government makes to insurance companies to lower the cost of co-payments and deductibles. Now, if he goes ahead, the nonpartisan CBO says it will cost taxpayers nearly $200 billion over the next 10 years. The new CBO report also says premiums would rise by about 20 percent, but that increase would be offset by higher government subsidies. To help us sort this out is NPR health policy correspondent Alison Kodjak. Welcome to the studio.

ALISON KODJAK, BYLINE: Hi, Audie.

CORNISH: So what exactly are these payments for?

KODJAK: Well, so the Affordable Care Act actually requires insurance companies to offer discounts to low-income customers. They offset their deductible and their co-payments. And the law says the government will reimburse the company for those costs. But Republicans have been opposed to these payments. They're known as cost-sharing payments. And the president has been threatening to cut them off on Twitter quite a lot this summer.

CORNISH: Now, if this increases the premiums and increases the federal deficit by - the precise number was 194 billion, what's the argument that the White House is making for cutting off the payment?

KODJAK: Well, one analyst I talked to said this plan doesn't actually meet any policy goals, assuming those are to increase access to health care or to cut costs. But one thing the president has said over and over is that he wants to let Obamacare implode. That would help him to be able to force a replacement of the program that he just doesn't like. So these threats to cut off the - these payments came in that context. But what we learned today from the CBO is that even getting rid of these reimbursements probably would not kill the Affordable Care Act, and it may actually help because it may lead more people to sign up for insurance.

CORNISH: What do you mean by that? I mean, why would it cost so much?

KODJAK: Well, so it would increase subsidies. Twenty percent of the entire - this is 20 percent of the entire cost of the Affordable Care Act, that $194 billion. And the Affordable Care Act design says people pay a specific share of their income toward health care premiums. So if the premiums go up, which they would under - if he cut these payments off, then the subsidies go up. And the government has to pay subsidies for a lot more people than it pays for these cost-sharing payments.

CORNISH: And before I let you go, you said this also might increase the number of people with health insurance. How would that work?

KODJAK: Well, that's because of those subsidies going up. So people, even those who didn't get the cost-sharing payment reductions, they would have a bigger subsidy to go shop for insurance. So they might find that the insurance is cheaper, and they could then maybe be lured into the markets and decide to buy insurance even if maybe in the past they thought it was a little too expensive.

CORNISH: To step back for a moment, were these payments supposed to be for the long term? Like, when the Affordable Care Act was set up, did they think, we're always going to be helping out the insurance companies?

KODJAK: Yeah. Yeah. Well, it was - it was not really helping out the insurance companies. It's really a pass-through to help those low-income people meet their medical costs. So if you buy a policy that has a $5,000 deductible, that doesn't make insurance very affordable. So these payments were to get the insurance companies to offer the same plan but with a lower deductible.

CORNISH: Oh, so they wouldn't just say, oh, these people are too sick or too poor. We want out of the system.

KODJAK: Right. It was just to help lower-income people to be able to afford their health care. So the president's called it a bailout, but really, it's a subsidy for lower-income people and not a subsidy for insurance companies.

CORNISH: That's NPR health policy correspondent Alison Kodjak. Alison, thank you.

KODJAK: Thank you, Audie.

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