Dr. Ernest Levister
President Donald Trump’s executive order last week marks the first major salvo in what the White House promises will be an extensive targeted campaign to dismantle Obamacare, Trump announced last week that the government was ending payments to health insurers that help fund the law.
The approximately $7 billion a year in federal dollars have allowed companies to offer discounted plans to low-income Americans who buy coverage through the healthcare exchanges.
According to experts, withdrawal of the subsidies could lead insurers to drop out of the exchanges, healthcare marketplaces to collapse and premiums to increase. The biggest effect would be on the individual insurance market, through which about 3 million Californians buy a health plan.
Under the Affordable Care Act, there are two kinds of subsides intended to make insurance more affordable in the individual market.
One goes toward premiums and is given directly to consumers. The other reduces co-pays and deductibles, and is paid to the insurance companies so they can afford to lower the cost of their plans.
On California's exchange, Covered California, 90% of the approximately 1.5 million enrollees receive the first kind of subsidy and 50% benefit from the second one, according to officials.
What Trump got rid of was the second subsidy, known as cost-sharing reductions.
Will I be affected if I buy insurance through Covered California?
Not immediately. Officials at Covered California knew that Trump had been considering this move, so they developed a workaround.
The rates for 2018 health plans that were announced earlier this week include a surcharge on silver-tier plans. Officials were trying to prevent an immediate rate increase if the federal funding disappeared.
The surcharge on premiums for silver plans — one of four options, from bronze to platinum, in which the health plan pays 70% of your medical expenses — will range from 8% to 27%. But most consumers who choose these plans will be shielded from those increases because as their premiums go up, so will their premium subsidies.
Still, the undoing of the funding means that the 11 health plans in the state will not receive payments totaling $188 million over the final three months of 2017. The annual cost-sharing reduction payments to California are around $720 million.
Insurance plans for next year will be available for purchase in California from Nov. 1 to Jan. 31, 2018.