As if healthcare wasn’t confusing enough, some experts say that President Donald Trump’s recent decision to cut cost sharing reduction (CSR) subsidies for Obamacare might actually end up creating free basic insurance and more affordable comprehensive plans in some states.
State subsides reimburse insurers for discounts on copays, deductibles and other costs they’re required to cover under Obamacare. Trump likened them to bailouts, but decreasing those subsidies would activate other subsidy to provide more affordable plans for low to moderate income families.
"It's a kind of counter-intuitive result," Kurt Giesa, a health insurance expert with the Oliver Wyman consulting firm, told ABC News.
Basically, it means “many more Californians and people across the country will get a zero-premium bronze plan," Peter Lee, executive director of health insurance marketplace Covered California, told ABC. The Bronze plan is the most basic coverage under Obamacare, with Silver and Gold behind the mid-range and top-tier plans, respectively.
The subsidy change would allow people in California and other states — including Florida, Georgia, Illinois, Mississippi, Pennsylvania, Utah and Wyoming — to get free bronze plans and a gold plan for the same price as a silver plan.
This sounds like a win, but Trump’s cuts aren’t good news for middle class families who don’t qualify for plans under Obamacare — about 44 percent of Americans, according to a report from the Kaiser Family Foundation.
“It seems like he is trying to hurt the middle class,” Tom Westerman, a retired Pennsylvania resident, told Reuters. He already spends $520 a month for healthcare, a price that will continue to increase as much as 12 to 15 percent in 2018 as insurance companies find a way to counteract the missing subsidies. “He says he’s going to make it better for everyone. How does a (premium) increase make it better?”
However, there are still legal wranglings to be done before the subsidy cuts take effect. Democratic attorneys general from 18 states and the District of Columbia filed a lawsuit in federal court to block the cuts.
"His effort to gut these subsidies with no warning or even a plan to contain the fallout is breathtakingly reckless," New York Attorney General Eric Schneiderman said. "This is an effort simply to blow up the system."
And it might not even work: Though he wants to kill the healthcare marketplace, experts believe that Trump’s change to subsidies might push another 600,000 people in the affected states to sign up for Obamacare in order to take advantage of cheaper plans.