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US Gov’t Costs Could Rise $2.3b Without Obamacare Payments

US Gov’t Costs Could Rise $2.3b Without Obamacare PaymentsUS Gov’t Costs Could Rise $2.3b Without Obamacare Payments

The US government's costs could increase by $2.3 billion in 2018, if Congress and President Donald Trump decide not to fund Obamacare-related payments to health insurers, a study released on Tuesday by the Kaiser Family Foundation said.

The payments amount to about $7 billion in fiscal 2017 and help cover out-of-pocket medical costs for low-income Americans who purchase insurance on the individual insurance exchanges created by the Affordable Care Act, often called Obamacare, Reuters reported.

Trump has threatened to withhold the payments to force Democrats to the negotiating table on a healthcare bill to replace Obamacare. He has also said he will fund the subsidies if Democrats agree to funding for his proposed border wall with Mexico as part of efforts to pass a government funding bill this week and avert a shutdown. Democrats have rejected the conditional offer.

If no deal is made, parts of the federal government will shut down at 12:01 a.m. on Saturday.

The payments are the subject of a pending Republican lawsuit that was appealed by the Obama administration and put on hold when Trump took office.

The government could save $10 billion by revoking the payments, Kaiser said. But insurers that remain in the market would have to hike premiums by nearly 20% to cover their losses, Kaiser found, so the government would have to spend $12.3 billion on tax credits to help pay for Americans' premium costs—a net increase of 23% on federal spending on marketplace subsidies.

The projection assumes that insurers remain in the marketplace next year. Health policy experts have said that without the payments, many insurers could not afford to stay in the market and will likely exit, which would leave some US counties without an insurer.

Aetna, UnitedHealth Group Inc and Humana have already exited most state exchanges for 2017 and said they will do so next year as well.

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