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White House Reverses Course on Obamacare Cuts from Sequestration

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The White House/Sipa USA/Newscom

The White House/Sipa USA/Newscom

As part of its latest effort to make Obamacare more politically palatable, the Obama Administration has switched course on a rule that would have made certain exchange subsidies subject to automatic federal spending cuts.

The Committee for a Responsible Federal Budget first spotted the reversal, which was part of a report from the Office of Management and Budget presented to Congress on Monday. The report detailed the impact that sequestration—part of the Budget Control Act of 2011—would have on mandatory federal spending for fiscal year 2015.

As CRFB noted, the new OPM report said Obamacare’s cost-sharing subsidies no longer faced a roughly 7 percent sequester cut, thereby restoring about $560 million of the program’s estimated $8 billion cost for the fiscal year.

These health subsidies, which are paid directly to insurers, reduce the maximum costs that Obamacare enrollees with household income levels below 250 percent of the federal poverty level pay for out-of-pocket costs like insurance co-payments and deductibles. Obamacare has a separate tax credit that—depending on the enrollees’ income level—subsidizes premiums for health plans that are bought on the health law’s federal and state-run insurance exchanges.

CRFB said it’s unclear why OPM changed its opinion but that the reversal may be based on the fact that low-income, cost-sharing subsidies from Medicare Part D are exempted from sequestration.

Last October, former Heritage Foundation senior policy analyst Chris Jacobs warned that Obamacare enrollees would be in for a rude awakening if the cost-sharing subsidies were part of upcoming spending cuts. “Either individuals who endure an arduous process to sign up for insurance on balky exchanges will face a ‘bait-and-switch,’ with cost-sharing levels higher than advertised, or insurers will face the prospect of billions of dollars in losses,” he wrote before the new OPM change. “Neither option is acceptable.”

The post White House Reverses Course on Obamacare Cuts from Sequestration appeared first on The Foundry: Conservative Policy News from The Heritage Foundation.

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