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It has come to our attention that after seven years of fighting against the Affordable Care Act and promising to repeal and replace it, many Republicans have absolutely no clue how any part of the law works. Even Sen. John Thune (R-SD), who is in Republican leadership admits it. "There is a lot of misinformation out there," he says, while conceding that the payments to insurers Donald Trump has ceased are not a bailout and do indeed save the federal government money.
Trump is particularly fond of calling these payments bailouts, and pretty much any Republican commenting on them will say the same thing. Here's the deal. They're not. A bail-out is when the government has to stop in to save a company or an industry from bankruptcy. These payments aren't that. They're reimbursement for insurance companies who are required by law to help out lower-income customers in their Obamacare plans with their deductibles and co-payments. That's part of the "affordable" in the Affordable Care Act. They're making health insurance cheaper so that more people—7 million people currently, about 58 percent of the Obamacare enrollment—can afford it.
Here's how it works. People who have incomes of 100 to 250 percent of the poverty level (just under $25,000 for individuals and $62,000 for a family of four) and who buy the standard silver plan can get the assistance. The subsidies are only available on the silver plans, the solid, middle-of-the road plans that the law sets as the benchmark. These plans pay 70 percent of covered medical costs for consumers, and the premium set for the second cheapest silver plan is the amount used by states to serve as the basis for premium subsidy calculations. These are the only plans in which enrollees can get both CSR subsides and premium subsidies. The CSRs, again, are paid by the insurance company.
"The insurers don't make any money off of this," said Timothy S. Jost, an emeritus professor at the Washington and Lee University School of Law and a contributing editor at Health Affairs Blog. "They don't even cover administrative costs. It's simply a dollar-out, dollar-in reimbursement."
How do they save money? In combination with those other reimbursements—the premium subsidies. If you cut the CSR reimbursements, insurers have to raise premium costs on the silver plans to make up the difference—they have to have those costs recouped. When those prices jump, so do the premium subsidies that the federal government is paying. That will happen on the bronze and gold level plans, too, so it ends up that by cutting out these reimbursements, the government is going to have to pay more to insurance companies. To the tune of $26 billion in the next decade according to the CBO. In a report that they provided to Congress. Which most the Republicans didn't read.
There are actually 12 Republican cosponsors of the new Murray-Alexander bill, so it's possible they (and Thune) did read the CBO report and do understand how this works. It's dead certain Trump does not, but that's seeming more and more irrelevant all the time. Because if leadership actually allows this vote to happen, 12 Republicans is enough to get it out of the Senate. Getting it out of the Senate would create pressure to make it happen in the House. This is actually looking almost doable.