Insurers would hike premiums on Obamacare silver plans by 20% next year if President Trump stops funding a key set of subsidies, according to a Congressional Budget Office report released Tuesday.
The agency's projection, which based its estimates on how premiums would compare to current law, is in line with other analyses that looked at what would happen if Trump follows through on his threats to cease the payments for the cost-sharing subsidies.
The cost-sharing reduction payments go directly to insurers to reimburse them for reducing deductibles and co-pays for lower income enrollees. They are only available to people who buy silver-level plans on the Obamacare exchanges.
They are the subject of a court battle between the House of Representatives and the Trump administration, which inherited the case from the Obama administration. Trump has tried to use subsidies as a bargaining chip, first to get Democrats to the table and more recently to spur the Senate to return to its effort to repeal and replace the law.
Related: Trump-fueled uncertainty spurs Obamacare insurers to leave, hike premiums
Rates for silver plans would be 25% higher in 2020 and beyond, according to CBO. Premiums for other plans would rise a few percentage points during the next two years because of uncertainty surrounding the policy change, though they would settle down in line with previous projections in later years.
Eliminating the subsidies would also cost the federal government more -- increasing the deficits by $194 billion from 2017 through 2026. That's because the rate hike would increase the amount of the premium subsidies the government provides to help low- and moderate-income enrollees pay for coverage.
In an odd twist, eliminating the cost-sharing subsidies could eventually lead to more choice and lower costs for some moderate-income enrollees. That's because they would receive larger premiums subsidies, which would allow them to buy even more comprehensive gold plans that cover more out-of-pocket costs, CBO staffers said.
Lower-income consumers, the bulk of whom are eligible for the cost-sharing subsidies, would still be able to get plans with small deductibles and co-pays. They would pay a little more for these policies, but the larger premium subsidies would cover much of the higher premium.
About 5% of people would live in areas that would have no insurers next year, increasing the number of those who lack coverage initially. However, the number of uninsured would fall by 1 million people starting in 2020.
The report, which was requested by House Democrats, assumes that insurers are told by the end of this month that the payments will continue through 2017, but end after that. Insurers must finalize their rates on Sept. 5.
Though there have been signs that Obamacare is stabilizing, the Republican drive to dismantle the health care law has left insurers very jittery. In particular, they want assurances that the cost-sharing subsidies will be funded through 2018.
Without that promise, many are hiking their rates. Insurers that assumed the cost-sharing subsidy payments would be discontinued added between 2% and 23% to their premium requests for next year, according to a Kaiser Family Foundation survey of 21 major cities released last week.
Related: Anthem pulls out of Virginia's Obamacare exchange
Other insurers aren't waiting around to find out. Anthem (ANTX) is among the most recent to downsize its presence, announcing last week it was pulling out of Nevada and Virginia, while cutting its participation in Georgia nearly in half.
