The Trump administration will end subsidies to insurers selling plans on the Obamacare marketplaces to help cover out-of-pocket costs for low-income customers, the White House said in a statement late Thursday night.
It’s the latest example of the executive branch moving to dismantle former President Barack Obama’s signature legislative achievement, as Congress has repeatedly faltered in its own attempts to repeal and replace the law.
The payments Trump is ending, so-called cost-sharing reduction subsidies, total $7 billion. Their loss could further destabilize the individual insurance market, which was already set on edge by an executive order Trump issued earlier Thursday encouraging federal agencies to loosen Obamacare insurance regulations. That order could give rise to a parallel insurance market of cheap, skimpy plans that directly compete with Obamacare insurance plans and cherry-pick their healthiest customers.
The CSRs are distinct from the Obamacare tax credits, applying only to Obamacare enrollees who earn very little. Customers sometimes aren’t aware that they receive CSRs—insurers are required to provide them automatically, whether they get reimbursed or not. But if the payments stop flowing from the federal government, insurers may raise rates across the board to compensate, according to Consumer Reports.