"The CBO's report once again exposes the vast cynicism of President Trump's threats to purposefully raise Americans' health costs by cutting off cost sharing reduction payments", House Minority Leader Nancy Pelosi said in a statement.
Premiums for the mid-range Silver plans sold through the exchanges would jump by 20 percent immediately, and 25 percent in the longer term. But under the Affordable Care Act, insurers are required to provide the discounts to low-income people.
Attempts to repeal and replace the Affordable Care Act, along with repeated threats from the Trump administration to end the cost-sharing subsidies, have left insurers with uncertainty about the future of the health care law. Unless they receive answers soon, sources said, insurers would be in the same position come September 5.
Leslie Dach, director of the Obamacare advocacy group Protect Our Care Campaign, said, "We are glad the administration is making these crucial payments to help lower out of pocket costs and increase deductibles for August". "If you can cover roughly the same number of people for about $200 billion less, why wouldn't you want to do that?" he asks.
Cost-sharing payments reimburse insurers for subsidizing out-of-pocket costs for lower-income people.
Killing the subsidies would also cause insurance premiums to rise. Individuals who make between 100 and 250 percent of the federal poverty level - about $12,000 to $30,000 a year - are eligible for these subsidies.
Last year, about 85 percent of people who bought Obamacare insurance got a tax credit, according to the Centers for Medicare and Medicaid Services. With subsidies shooting up, the CBO finally concludes that about a million more Americans will end up insured than if Trump hadn't tried to bring the market crashing down. Moreover, ending the payments would only increase federal deficits since it would trigger a rise in separate health law subsidies for premiums, wiping out any potential savings.
"I think the government - Congress and administration, has treated [insurance companies] shamefully", Timothy Jost, emeritus professor at Washington and Lee University School of Law, told ThinkProgress.
But, the CBO also says the higher premiums would also increase federal subsidies on many of those same plans and that would increase the federal deficit $6 billion next year and by as much has $26 billion in a decade.
If these payments ended, some insurance companies would likely withdraw from Obamacare marketplaces.
The uncertainty surrounding the cost-sharing reductions came after Congressional Republicans sued to stop the president from paying them; then this year, Trump spoke of them as a negotiating chip and tweeted that they are "BAILOUTS".
While President Trump hasn't made a decision to continue pushing the lawsuit against the Obama administration, multiple Democrat state attorneys have gotten involved, the court giving them permission because they said that they were under-represented by Trump.