According to a recent Kaiser Family Foundation report, average premium for the silver plan of the Affordable Care Act (Obamacare) will rise by 19 percent if the government fails to fund the program’s cost-sharing subsidies.
The Affordable Care Act used cost-sharing subsidies as a means to curtail the cost of out-of-pocket expenses for low-income households by reimbursing insurance providers.
Ways and Means, and Energy and Commerce, the two House committees investigating the source of the funding for the subsidies, said they were unconstitutional. They found that the Obama administration had been funding the program without permanent adoption from the Congress. They also 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.
The report states that if the government fails to fund the program through cost-sharing subsidies, premiums will rise significantly; from 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 currently around 7.1 million Americans who receive these types of payments, accounting for almost 58 percent of the people who chose an Obamacare plan in 2017.
Additionally, it has been noted that these potential premium hikes would come after the Obama administration’s announcement in 2016 that premiums would increase by approximately 22 percent in 2017, after several insurers faced heavy losses.
President Donald Trump and several other Congressional Republicans have also repeatedly warned that Obamacare will ultimately collapse due to its own shortcomings, if it isn’t repealed soon enough.
With that said, health insurance providers continue to experience soaring profits. In February, one of the largest insurance providers, Aetna, doubled it’s quarterly cash dividends and announced a $3.3 billion share buyback. The company generated $2.3 billion in net income in 2016.