Loss of Obamacare Subsidies Would Hit GOP Districts Hardest

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By Alex Ruoff

Republican-leaning parts of the country are more likely to feel the pain if the Trump administration ends cost-sharing payments to Obamacare health insurers, according to an analysis by Bloomberg BNA.

States With Most Consumers Receiving ACA Subsidies

Nearly 2 million people in Texas and Florida were in health plans that received cost-sharing reduction subsidies in 2016, representing more than a quarter of all Americans whose out-of-pocket health costs were offset by the payments, according to data from the Department of Health and Human Services. Florida had one of the highest rates of consumers purchasing plans with cost sharing, with 71 percent of people on the state’s individual marketplace on such plans.

If cost-sharing reduction subsidies, created under the Affordable Care Act, were to cease, insurers in Florida and Texas are likely to stop offering plans or raise premiums significantly to offset the loss of these subsidies, JoAnn Volk, a research professor at the Georgetown University Center on Health Insurance Reforms, told Bloomberg BNA April 18.

“The expectation is insurers would get out of the market as soon as the law allows,” she said.

The large number of people in Republican-controlled congressional districts receiving cost-sharing subsidies, particularly in Florida, is creating a vocal constituency for the ACA, supporters of the health law told Bloomberg BNA. Many who fear losing federal support for insurance costs are urging their lawmakers to fund the subsidies and oppose efforts to repeal the ACA.


Florida had the largest share of people on health plans with cost-sharing reduction subsidies, with 1.24 million Floridians on plans that receive between $108 and $11 per month per enrollee, according to the HHS.

Southern Florida, particularly the Miami-Dade area, had high levels of people on plans with subsidies, according to the data. Nearly 80 percent of people living in the Miami-Dade area bought plans with the subsidies, which are given to individuals making between $11,700 and $29,425 per year. In Miami-Dade and nearby Broward County, 467,548 people bought plans with cost-sharing reduction subsidies.

Many people living in South Florida work in small businesses or the service industry, where they don’t receive health benefits from their employer and make too much to qualify for Medicaid, Jeff Johnson, director of AARP in Florida, told Bloomberg BNA. Some on the individual health insurance market are also retirees under 65 years old, meaning they don’t qualify for Medicare, he said.

Without the ACA’s cost-sharing subsidies and tax credits for premiums, Johnson said, many of these people would not be able to afford health insurance. As a result, many are asking their representatives in Congress to oppose ACA repeal efforts, Johnson said.

“A lot of people didn’t realize they’d end up depending on it. Maybe they retired early and didn’t expect the individual market to be so problematic,” he said. “Now they don’t want to see it go away.”

Florida Republicans have largely supportedACA repeal, and none is a vocal supporter of the law.

Reps. Mario Diaz-Balart (R-Fla.) and Carlos Curbelo (R-Fla.), who represent areas of Miami-Dade, supported the House bill to repeal the ACA, which would have ended cost-sharing subsidies. Rep. Ileana Ros-Lehtinen (R-Fla.), opposed the legislation, citing concerns from her constituents.


In Texas, the largest concentration of people on plans supported by cost-sharing reduction subsidies were in Harris and Dallas counties, where more than 366,000 of the state’s 735,930 subsidy-support plans were bought, according to the HHS.

Unlike Florida, the areas in Texas where subsidies are the most common are represented by Democrats, like Rep. Al Green (D-Texas), who was a vocal ACA supporter.

Future of Cost Sharing

Whether lawmakers will agree to fund the estimated $7 billion in cost-sharing subsidies due this year is unclear.

Several House Republicans have said they expect to appropriate the money as part of a next budget bill, set to be passed by the end of April, but the House leadership hasn’t committed to funding cost-sharing reductions.

House Republicans successfully sued the Obama administration over the cost-sharing subsidies, arguing the necessary funds were never appropriated by Congress. A district court’s May 2016 decision in that case (U.S. House of Representatives v. Burwell,185 F. Supp. 3d 165, 2016 BL 151586 (D.D.C. 2016)) was appealed by the Obama administration.

The lawsuit has left the future of the subsidies uncertain. The Trump administration could simply drop the appeal of the lawsuit and accept the court’s decision to halt the payments.

President Donald Trump has claimed he might stop paying the subsidies in a bid to force Democrats to support an ACA repeal bill. Democrats have responded by demanding the subsidies be included in the next federal budget bill.

“We’re working hard to get it in the bill,” Senate Minority Leader Chuck Schumer (D-N.Y.) said in an April 18 conference call. “We’re very hopeful. Negotiations seem to be going quite well.”

Cost-Sharing Subsidies

Of the 9.63 million people who bought health insurance on the federal health insurance marketplace—used in 38 states for plans in 2016—5.61 million had their copays, deductibles and other out-of-pocket costs reduced by cost-sharing reduction subsidies, according to HHS data.

An estimated 1.4 million people received the subsidies in states that had their own marketplaces, according to an analysis from the Kaiser Family Foundation.

The Congressional Budget Office estimated that the cost-sharing subsidies cost the federal government $7 billion in 2016 and will grow to $13 billion by 2020. The federal government pays insurers directly for cost-sharing subsidies, unlike refundable tax credits, which are given to beneficiaries.

People on the individual market in Republican-controlled states are more likely to buy plans with cost-sharing reduction subsidies because the majority of those states didn’t expand their Medicaid programs, leaving those who qualify for the largest subsidies on the market, Volk said.

The ACA extended new federal funding to states to include in their Medicaid programs people whose income was up to 133 percent of the poverty level. The largest cost-sharing reductions are available to people whose income is below 150 percent of the federal poverty level who buy plans on the individual market.

Many of the people who bought plans with cost-sharing subsidies make just enough not to qualify for Medicaid, but not enough that they can afford to pay their own medical costs without assistance, Volk said.

To contact the reporter on this story: Alex Ruoff in Washington at aruoff@bna.com

To contact the editor responsible for this story: Brian Broderick at bbroderick@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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