In the ever continuous battle between President Trump and Congress over health care, things have devolved to a few simplistic approaches. Trump still wants a complete repeal and replacement of Obamacare. Cowards in Congress continue to stall because they fear voter backlash. If they instead simply served the best interests of America, there wouldn’t be a problem. That aside, the Congressional breakdown has left Trump with few options but to unilaterally slash the parts of Obamacare that he can. Congress has responded to this potential by commissioning a study, and it has some surprising results that certainly favor Trump’s position.
The Congressional Budget Office Report
The Congressional Budget Office (CBO) took a hard look at cost-sharing reduction (CSR) subsidies. This primarily applies to silver and gold health insurance plans. The actuaries compared all ranges of participants and aid programs, and what they found is surprising. According to their data, cutting CSRs would benefit low-income Americans participating in health insurance exchanges. This is especially true for participants under 250 percent of the poverty line and elderly participants under 400 percent of the poverty line. In general, these groups would receive more expansive coverage for less money out of their own pockets.
Shifting Expenses
It’s strange to think that cutting subsidies for lower-income Americans would actually save them money from the start. But it will. Here’s how. Cutting the CSRs wouldn’t be a repeal of Obamacare. Instead, it would just shift expenses. Current recipients of CSRs would still need insurance, and without those subsidies their premiums would immediately rise. The net benefit comes from the fact that those higher premiums would qualify them for larger tax credits. Under the current letter of the law, those tax credits would, on average, rise faster than the unsubsidized premiums. This leaves Americans close to the poverty line in better shape and simply shifts the financial burden to taxpayers.
The CBO suggests that cutting subsidies would actually add $179 billion to the federal deficit. Now, there are plenty of reasons to not like the idea of higher deficits and shifting financial burdens, but the unquestionable finding at this point is that cutting CSRs will not hurt the poor. The study also suggests that health care participation will also increase as a result of cutting these subsidies.
The Subsidy Threat
This study was done largely because Trump has clearly threatened to cut funding for CSRs if Congress doesn’t make headway on repealing and replacing Obamacare. His critics are quick to suggest that this would lead to the death of poor Americans. Real math once again sides against them. It’s also important to know that Trump’s actuaries are aware of the impact of healthcare subsidies. In a strange twist of irony, it is Trump that is offering one of the best ways to help lowest-income Americans by promoting the most effective income redistribution program we’ve seen. Leave it to the businessman to immediately find a way to use tax structure to attack one of the country’s largest problems.
Further Implications
The more you look at it, the more you realize that cutting CSRs is the most Trump-like policy move possible. It helps the working-class Americans who put him in office through tax incentives. Simultaneously, it hammers illegal immigrants who abuse the system. But cutting subsidies and rerouting that help through the IRS, a very large chunk of illegally employed immigrants will lose access to subsidized health care.
If you aren’t paying taxes, the new plan doesn’t help you. The bleeding hearts are sure to whine about this once they realize it, but Trump has found a reasonable way to help America on several fronts through a single policy change. With one of the largest and exploitable benefits to illegal immigrants being slashed, even more would voluntarily head back across the border — something that is already happening at a record pace.
It’s too soon to say that a subsidy cut will happen for sure. At this point it’s still a bargaining chip for Trump to try and get a more comprehensive and beneficial change out of Congress. If they continue to fail the American people, Trump can still follow through with CSR cuts and unilaterally improve America to the small extent possible. Either way, he is using an innovated approach and sound math to cut through bureaucracy to the benefit of Americans.
~ American Liberty Report
