If Government Fails to Fund Subsidies, Obamacare Premiums Will Rise by 19%

Republican investigation said subsidies were unconstitutional

Health care activists lift signage promoting the Affordable Care Act
Health care activists lift signage promoting the Affordable Care Act / Getty Images
April 9, 2017

If the federal government fails to fund the Affordable Care Act's cost-sharing subsidies, average premiums for the silver plan would have to rise by 19 percent, according to a Kaiser Family Foundation report.

Cost-sharing subsidies were put in place by the Affordable Care Act to rein in the cost of out-of-pocket expenses for lower-income individuals by reimbursing insurers.

Two House committees, Ways and Means and Energy and Commerce, investigated the source of funding for the subsidies and said they were unconstitutional. They said the Obama administration was funding the program without a permanent appropriation from Congress and filed a lawsuit challenging the payments.

"With a legal appeal pending, the federal government and Congress are in a position to choose whether to continue reimbursing insurers for their cost," Kaiser said.

If the government fails to make these payments, premiums will rise from a range of 9 percent in North Dakota to 27 percent in Mississippi.

"The analysis—based on cost-sharing subsidy payments and benchmark premiums in federal marketplace states in 2016, the most recent data available—finds that the estimated premium increase for silver plans would be higher (21%) in states that did not expand Medicaid under the ACA than in states that expanded Medicaid (15%)," the report notes.

"Cost-sharing subsidies are generally higher in states that have not expanded Medicaid because they have a larger share of enrollees with incomes from 100% to 150% of the poverty level, who get the biggest cost-sharing reductions."

There are 7.1 million Americans who receive these types of payments, representing about 58 percent of those who selected an Obamacare plan in 2017.

These potential premium increases would come after the Obama administration announced last year that premiums would increase by roughly 22 percent in 2017 after many insurers experienced losses.

Published under: Obamacare