Trump’s Plan to Sabotage Obamacare Costs $200 Billion and Doesn’t Really Even Sabotage Obamacare

Ian Millhiser

Ian Millhiser Senior Constitutional Policy Analyst, Think Progress

For months, President Donald Trump has flirted with a tactic that could help make “Obamacare implode” — thus potentially forcing House and Senate Democrats to negotiate on a way to dismantle the law. On Tuesday, however, the Congressional Budget Office (CBO) released a report on what would actually happen if Trump implemented this tactic, and the results are less than spectacular.

For the most part, Obamacare would continue chugging along as usual. But the federal government would wind up spending $194 billion more.

The tactic Trump has considered revolves around the Affordable Care Act’s Cost Sharing Reductions (CSRs), which reimburse health insurers for the cost of reducing deductibles, co-payments, and other expenses for people with modest incomes. In part due to a federal court decision, Trump could likely cut off these CSRs, thereby throwing the insurance markets into a bit of turmoil.

The good news for people who are insured through the Obamacare exchanges, however, is that that turmoil is likely to sort itself out in a few years — at least according to the CBO. Many exchange customers won’t be impacted at all by the loss of CSRs, and some people could actually be better off.

According to the CBO analysis, if Trump cuts off the CSRs, the number of people with insurance would drop by about 1 million in 2018, but the insurance rate would more than recover within two years. By 2020, about 1 million more people would be insured than otherwise would be if the CSRs remain in place.

This small uptick the insurance rate, however, will come at a high price: “$194 billion from 2017 through 2026.”

Plans sold on Obamacare exchanges are segmented into categories such as “Bronze,” “Silver,” “Gold,” or “Platinum,” depending on how much coverage they offer patients. Individuals who earn below a certain amount of income receive subsidies to help them purchase health insurance, and the amount of this subsidy is tied to the second-least expensive silver plan available in a particular market.

CSRs, meanwhile, help reduce insurance premiums, but they are only available under silver insurance plans. Thus, if Trump cuts off CSRs, that will raise the cost of silver plans — which will itself trigger higher subsidies for everyone in the Obamacare exchanges who qualifies for one, even if they purchase a bronze, gold, or platinum plan.

These higher subsidies partially explain why the federal government would pay so much more if Trump cuts off the CSRs. Trump would cut off a subsidy that only impacts the silver plans, and wind up jacking up subsidies for all plans in the process. Additionally, because cutting off the CSRs would increase premiums in the silver market, the government would wind up paying more to subsidize silver plans than it would if those premiums stayed low.

The higher subsidies also explain why the uninsurance rate would drop by 2020. As CBO explains, “the effect on coverage would stem primarily from the increases in premium tax credits, which would make purchasing nongroup insurance more attractive for some people. As a result, a larger number of people would purchase insurance through the marketplaces, and a smaller number of people would purchase employment-based health insurance.”

To be clear, none of this makes cutting off CSRs good policy. Especially in the short term, premiums would rise and insurers may drop out of some insurance markets entirely — or, at least, they may do so temporarily until the industry adjusts to its new reality. People with higher incomes who do not qualify for subsidies would be particularly hard hit, as they would need to cover higher premiums out of pocket. And the government would wind up wasting a lot of money on a less efficiently policy.

But it wouldn’t be the Obamacare implosion Trump hopes for. It would just be really expensive.


Reposted from ThinkProgress

Ian Millhiser is a Senior Constitutional Policy Analyst at the Center for American Progress Action Fund and the Editor of ThinkProgress Justice. He received a B.A. in Philosophy from Kenyon College and a J.D., magna cum laude, from Duke University. Ian clerked for Judge Eric L. Clay of the United States Court of Appeals for the Sixth Circuit, and has worked as an attorney with the National Senior Citizens Law Center’s Federal Rights Project, as Assistant Director for Communications with the American Constitution Society, and as a Teach For America teacher in the Mississippi Delta. His writings have appeared in a diversity of legal and mainstream publications, including the New York Times, The Los Angeles Times, U.S. News and World Report, Slate, the Guardian, the American Prospect, the Yale Law and Policy Review and the Duke Law Journal; and he has been a guest on CNN, MSNBC, Al Jazeera English, Fox News and many radio shows.

Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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