CBO Analysis Projects Rise in Deficit If Cost-Sharing Payments End

Though the Trump Administration decided to continue cost-sharing payments to insurers through September, the long-term future of the program is uncertain. According to an analysis by the Congressional Budget Office (CBO), though, cutting such payments could increase the federal deficit by $194 billion over 10 years.

Established under the Affordable Care Act (ACA), the cost-sharing program mandates that the federal government reimburse insurance companies for the discounts on copays and deductibles that the companies are legally required to give low-income customers.

The CBO report states that ending the payments will cost the government more in subsidies because insurance companies will likely raise premiums in response. Some insurance companies may leave the ACA health-care marketplace entirely – according to the analysis, 5 percent of the population could have no insurance options available.

The White House has made the payments on a month-to-month basis since President Trump took office and may halt the payments entirely.

Sources: NPR, August 15, 2017; CBO, “The Effects of Terminating Payments for Cost-Sharing Reductions Analysis,” August 2017.