Trump Signs Executive Order Ending Obamacare Subsidies

Chris Gaetano
Published Date:
Oct 13, 2017

Donald Trump has signed an executive order that ends billions of dollars in cost sharing reduction payments to insurers, a move that upends a key component of the Affordable Care Act, which could increase premiums by as much as 25 percent, according to CNBC.

 Under the Affordable Care Act, insurers must give discounts to out-of-pocket health costs to low-income customers who get their plans through the exchanges. The payments, $7 billion this year and at least $10 billion next year, reimburses insurance companies for these discounts. Without these reimbursements, insurers will be forced to pay for the entirety of the discounts offered through the exchanges. Faced with increased costs from the executive order, insurers are expected to significantly raise the cost of their health plans to make up for the losses, something that a number of insurers have already said they would do when Trump had previously threatened to cut off the payments. They may also opt to exit the exchanges entirely. 

A Congressional Budget Office analysis said that people could expect to see a 20 percent increase in premiums, which would grow to a 25 percent increase by the year 2020. It also estimated that the federal deficit would increase by $200 billion. 

New York Attorney General Eric Schneiderman and California Attorney General Xavier Becerra said that they would file lawsuits to keep Trump from ending the subsidies. 

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