Jun 21, 2017

Why a cutoff of insurer payments could hurt the middle class


The New York Times makes an important point about what would happen if the Trump administration stops paying for the Affordable Care Act's cost-sharing reduction subsidies: It hurts the middle class more than low-income customers. Here's why:

  • The subsidies are meant for low-income people. Even if insurers stop getting reimbursed for them, they still have to pay them.
  • But insurers say they'll raise their premiums to make up for the losses. That wouldn't hurt low-income customers, because they also get tax credits that would cover much of the higher premiums.
  • But middle-class customers — who earn too much to qualify for those tax credits — would have to pay the higher premiums without any financial help.

Where it stands: The Trump administration made the June payments, but hasn't made any promises beyond that. And Congress is still debating whether to fund them.

Go deeper