Health insurance premiums likely to soar after subsidy cut

We got a bit of a preview today about what’s going to happen now that President Trump has ordered a halt to subsidy payments to insurance companies for health insurance copayments and deductibles.

In Massachusetts, the state’s health insurance exchange — Health Connector — had planned to raise premiums for people who don’t get coverage through their employers by nearly 9 percent.

Trump ordered an end to the subsidies, calling them an insurance company bailout.

Today, Health Connector, raised rates an average of 24 percent for next year’s coverage, the Boston Globe reports.

This week a reported deal to keep the subsidies collapsed, the New York Times reported, after the president appeared to walk away from the agreement.

“We want something that doesn’t just bail out the insurance companies but actually provides relief for all Americans,” the president’s spokesperson said.

It’s possible a bill to provide the subsidies could be part of a showdown in December with the threat of a government shutdown at stake.

Meanwhile, the Associated Press says the end of the health insurance subsidy could have the unintended effect of making more basic coverage available to people for free.

The Obama-era health care law actually has two major subsidies that benefit consumers with low-to-moderate incomes. The one targeted by Trump reimburses insurers for reducing copays and deductibles, and is under a legal cloud. The other subsidy is a tax credit that reduces the premiums people pay, and it is not in jeopardy.

If the subsidy for copays and deductibles gets eliminated, insurers would raise premiums to recoup the money, since by law they have to keep offering reduced copays and deductibles to consumers with modest incomes.

he subsidy for premiums is designed to increase with the rising price of insurance. So government spending to subsidize premiums would jump.

“This is where the counting gets sort of weird,” said Matthew Buettgens, a senior research analyst with the Urban Institute.

The nonpartisan policy research group has estimated that richer premium subsidies could entice up to 600,000 more people to sign up for health law coverage. That depends on how insurers and state regulators adjust, which isn’t totally clear yet.

None of that, however, does anything for people who make too much money to get tax credits to help pay for their health insurance.

Sign-up season for health insurance starts in less than two weeks.

  • I was on the exchange making too much for a subsidy until 10/1. Because of my timing of my transition I’m still receiving all of next years documents sent to my house. Both MNsure and my plan have been sending information noting my premiums are only an estimate and could fluctuate based on the outcome of both Daytons reinsurance program and these subsidies. A point of interest, before Trump made this decision my premium would have actually gone down for 2018.

  • Robert Moffitt

    I wish this would only apply to the 23 million Americans who knew what they were signing up for.

    • I see what you did there (and approve).

    • AmiSchwab

      i wish this would only apply to the 60 mio. americans who knew who they were voting for