President Donald Trump’s decision to end key federal payments to Obamacare insurers “will lead to substantial” losses of revenue for health plans, a new analysis finds.
Avalere Health said that insurers nationally will lose $1 billion in federal funds as a result of Trump’s dramatic move, unless it is reversed by Congress or halted by court order.
The cost-sharing reduction payments reimburse insurers for discounts in out-of-pocket health costs they currently give to about 6 million Obamacare customers.
Obamacare insurers in Florida will lose the most from Trump’s decision: $200 million, according to Avalere Health.
They are followed by California insurers, which will lose about $107 million in payments, Texas insurers, which will lose about $98 million, and North Carolina insurers, which will lose about $66 million, the analysis found.
Many insurers, in setting their Obamacare plan premium prices for 2018, had accounted for the possibility of the payments being ended during that year by requesting higher rates than they otherwise would have.
But Trump’s decision to end the payments effective last week — after months of threatening to do so — means insurers will have to eat the loss of that money through the end of 2017, since they are not able to adjust their current premium prices upwards to absorb the financial fallout.
“Plans can neither increase premiums nor exit the market at this late stage,” noted Caroline Perason, senior vice president at Avalere.