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U.S. healthcare costs rise after Trump cuts key subsidy

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This is a developing story. Please check back for updates – or hit the TALK button to suggest additions.

On October 12, President Donald J. Trump cut a key federal subsidy that allowed an estimated six million Americans to pay less money when seeking medical treatment.

Without the subsidies, which were set at $7 billion in 2017, health insurance companies have begun to increase the cost of their service. The Kaiser Family Foundation, a nonprofit dedicated to coverage of the healthcare sector, reported that premiums of a popular insurance option, known as “Silver Plans”, have spiked from between 7 percent to 38 percent. The differences in prices depend on the state and insurance company.

The subsidies President Trump defunded are known as “cost sharing reductions” (CSR). These help lower out-of-pocket costs for low-income consumers who bought private health insurance through the marketplace established under Affordable Care Act (ACA), commonly referred to as Obamacare. Six million Americans are estimated to qualify for these CSRs, according to CNN.

Consumers are not necessarily paying these higher premiums. The federal government is largely footing the bill. Under the ACA, those who earn up to 400 percent of the federal poverty level are eligible for a tax-credit to offset possible rises in cost. This poverty level is $48,240 for an individual and $98,400 for a family of four.

“The irony is that the subsidies to pay for the premiums are somewhat higher than the direct cost sharing reductions themselves. So it’s actually costing the federal government more,” Gerald Kominski, director of health policy research at the University of California Los Angeles told WikiTribune.

The most affected consumers are “Silver Plan” holders who earn over 400 percent of the federal poverty level, and thus not eligible for the tax-credit. For this demographic, the popular Silver option is often untenable.

“It’s not a death blow, but it’s damaging.” says Kominski, “If you don’t qualify for a subsidy, and your premium goes up 38 percent, that might be a strong incentive to switch to a lower cost Bronze plan.”

The people affected by Obamacare 

The majority of U.S. residents receive health coverage through their employer. According to the 2016 U.S. Census, 56 percent of Americans had employer-based coverage. Nineteen percent were covered through Medicaid, a government-paid program for the poorest Americans and 17 percent were covered through Medicare, another government service for those over the age of 65.

Less than 16 percent of Americans purchase their health insurance through what is known as the “individual market”, where people purchase coverage from private insurance companies. This pool of insurance plans is often known as the “healthcare exchanges,” and it’s a defining feature of the ACA.

The cost of these individual market plans, however, has been a concern before the Trump administration. Individuals who make $40,000 a year must pay a national average of $282 a month in premiums, according a calculator created by the Kaiser Family Foundation. The average deductible, the amount the consumers pays before insurance covers the rest, was $4,385 in 2016, according to eHealth.

Health insurance companies have complained that they lose money in the individual market. So when there was speculation of President Trump defunding cost sharing reductions (CSR), which benefited 57 percent of enrollees, a spike in premiums was expected.

Reuters reported that some insurance providers already began to raise costs even when a legislative fix was a political possibility. On August 10, The Kaiser Family Foundation predicted that premiums would spike by as much as 20 percent in 2018 if CSRs were cut.

President soured on a bipartisan fix

On October 18, President Donald J. Trump rescinded his support for the bipartisan deal that addressed the future of the Affordable Care Act (ACA), commonly referred to as Obamacare.

The bipartisan legislation was drafted on October 17 by Democratic senator Patty Murray and Republican senator, Lamar Alexander. Senator Murray was able to secure two more years of federal subsidies for the healthcare exchanges, which are a defining feature of the ACA. This move was considered important for the Democrats’ agenda considering President Trump announced plans to cut the federal subsidies by executive order the previous week.

Senator Alexander achieved greater flexibility for states to approve insurance plans that offered less coverage, but were also less costly. Republicans have long complained of onerous restrictions on which insurance plans were eligible under the President Obama’s signature healthcare law.

President Trump initially offered support for the legislation as a short-term solution during a speech at the Heritage Foundation, a U.S. conservative think-tank. The next day, however, he announced he opposed the bipartisan effort, saying that he could “never support bailing out the insurance companies.”

In an interview with Axios, Senator Alexander stated that President Trump “completely engineered the plan that we announced yesterday,” by calling me repeatedly and asking Senator Murray to be a part of it.

“He wanted a bipartisan bill for the short term.”

On October 20, White House aide Marc Short told CNN that the president wanted to focus on ending the individual mandate, a key pillar of the ACA that requires everyone in the U.S. to purchase health insurance. The purpose of the individual mandate is to ensure that young and healthy people pay for insurance in order to offset the cost of insuring unhealthy, often older, U.S. residents.

Republican leadership want Obamacare gone

Republicans have made repealing and replacing the ACA a priority since the law passed in 2010. By 2014, Republicans had voted to repeal the law dozens of times. Their overarching criticism of the health care law is that it gives the federal government excessive control over the administration and funding of health care.

Despite controlling both houses of congress and the presidency in 2016, the Republican leadership has struggled to gather the necessary votes to pass replacement legislation.

While the bipartisan deal has aspects that Republicans support, many conservative Republican leaders have been against this bill from the beginning. Speaker Paul Ryan’s office stated that the focus should remain on repealing the ACA in its entirety.


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United States
Charles Michio Turner is an American journalist who reports on labor, politics and development. In 2016, he reported from Myanmar on the several growing social movements in the country. His goal is to find new ways to include audiences in the new reporting process. Let him know if there's an issue or question that you see as being underreported or poorly reported. Twitter: @charlesmichio

History for stories "U.S. healthcare costs rise after Trump cuts key subsidy"

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30 October 2017

18:05:42, 30 Oct 2017 . .‎ Peter Bale (Updated → updated categories)
11:04:05, 30 Oct 2017 . .‎ Natalia Avdeeva (Updated → Removed para break)
01:43:47, 30 Oct 2017 . .‎ Charles Anderson (Updated → update)
00:41:03, 30 Oct 2017 . .‎ Charles Turner (Updated → add update on csrs)

Talk for Story "U.S. healthcare costs rise after Trump cuts key subsidy"

Talk about this Story

  1. Rewrite

    What Canada taught Bernie Sanders about health care
    A trip to Toronto reveals a hard truth about bringing single-payer to America.

    Oct 31 2017
    https://www.vox.com/policy-and-politics/2017/10/31/16566450/bernie-sanders-canada-health-care

  2. Rewrite

    More unadulterated AWESOMENESS Charles!

    vis-a-vis “… Their overarching criticism of the health care law is that it gives the federal government excessive control over the administration and funding of health care.”

    personally speaking and witnessing — perhaps with a jaundiced eye here — is that the “overarching criticism of the health care law” is/has been the INDIVIDUAL (and corporate) MANDATE penalty/provision/stipulation, viz.:

    http://www.nytimes.com/2012/06/29/us/supreme-court-lets-health-law-largely-stand.html
    https://www.wsj.com/articles/SB10001424052702304898704577480371370927862

    over the last two days, it has again resurfaced as, oh, shall we say a “heated issue” :D, viz.:

    http://thehill.com/policy/healthcare/357992-brady-rejects-bid-to-repeal-obamacare-mandate-in-tax-reform
    http://thehill.com/policy/healthcare/overnights/356980-overnight-health-care-bipartisan-health-plan-faces-new-challenge

  3. Rewrite

    a SUBLIME EXEMPLAR of fact-based reporting on/of an issue (that has real impact) at its FINEST: Pure Unadulterated “Evidence-based journalism” reportage and a model/template for all to emulate/follow/adhere to… BRAVO Charles!

    1. Rewrite

      Thank you for your comment! The subject matter is dense, but as you mentioned, an important issue with real impact. I just updated the story, which involved altering the structure quite a bit. Let me know if my edits are unclear.

  4. Other

    If this story was last edited 3 days ago should the headline not be “Developing” anymore? Should there be a different label for something that isn’t being given live or regular updates?

  5. Other

    The approach this article takes is excellent. As I read questions were prompted by the atticle which were answered as I continued reading. I also liked the way the information was presented. It stated the pressing issues first then filled in with background.

    1. Rewrite

      Thank you! I’ll be update as federal subsidies are cut. Let me know if you think more context is needed, and of course, contribute as you see fit.

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