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The weird way Trump actually lowered Obamacare premiums for millions

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About a month ago, President Trump cut off a key Obamacare subsidy program.

Weirdly, it appears that this might make Obamacare more affordable than ever for many enrollees. It might make Obamacare work a bit better than last year, which certainly didn't seem to be the president's intention.

Let's unpack this a bit. The program that Trump stopped funding is called the cost-sharing reduction (CSR) subsidy. It was federal money to lower copayments and deductibles for low-income Obamacare enrollees.

Trump halted these payments last month, and in response, insurance companies jacked up the premiums on certain plans. They did so to recoup the money they would lose from the end of the CSR subsidy.

But here's where things get interesting: Many insurance plans (often at the behest of local regulators) only increased premiums on midlevel plans, called silver plans. And the silver plans are the ones the federal government uses to figure out how much of a premium subsidy Obamacare enrollees get.

This is a completely separate Obamacare subsidy program, which is used to reduce the cost of premiums for low- and middle-income enrollees (remember, the CSR subsidy goes to copayments and deductibles). The silver plans went up, and so did the premium subsidy.

So now you have a decent number of Obamacare enrollees shopping around with a much bigger subsidy. Now they could use that money to buy a silver plan and their out-of-pocket premium wouldn't rise very much. The premium went up, and the subsidy went up too.

Or they could use their subsidies to buy an even nicer, more generous plan (called a gold plan). If the gold plan premiums have held steady (as they have in many states, where plans concentrated the premium hike in the silver option), then the subsidy is going to make that nicer gold plan a lot cheaper — possibly even cheaper than the less generous silver plan.

Margot Sanger-Katz and Kevin Quealy at the New York Times explain the math:

Now the silver plans will be more expensive in many markets than gold plans that have much lower deductibles. For people who qualify for government subsidies, that’s good news: Their subsidies will rise with the rising cost of silver plans, and they’ll be able to afford a plan that requires much less out-of-pocket spending for their health care. For those who don’t, it highlights just how expensive many silver plans have gotten as a result of the president’s action, and how hard people may need to work to find an affordable option.

The least expensive gold option for next year is cheaper than the least expensive silver option in about a sixth of counties using Healthcare.Gov to market plans, as you can see on our map. Gold is a better option in much of New Mexico, Wyoming, Kansas, and parts of Wisconsin, Pennsylvania and Georgia. There are also a substantial number of counties in Texas, Florida, Oklahoma, South Carolina and Michigan where the price difference between a gold plan and a silver plan with a much higher deductible is smaller than $25 a month.

As Hannah Recht at Bloomberg observes, "For many Obamacare enrollees, 2018 will be the cheapest year ever." And that is expressly because state regulators and health plans were pretty cunning in figuring out how to react to the Trump administration's sabotage.

By concentrating the premium hikes in just silver plans, they were able to get their Obamacare enrollees more generous subsidies that they could use to purchase more generous plans at a lower price. This idea seems to have originated in California (which has a very active, very pro-Obamacare health insurance marketplace) and then quickly spread out to dozens of other states.

But there is one crucial element to getting better plans at a lower price: Enrollees have to shop for coverage. Obamacare's open enrollment period begins tomorrow, and this year it is especially important for enrollees to look at their options — to see if they live in an area where they can use their big new subsidy to buy a more generous plan.

Or, to put it in the terms of today's hospital: There are certainly tricks being played on Obamacare enrollees this year — but there are also treats to be had. But Obamacare enrollees are going to have to go out looking for them.

Graphic of the Day

Javier Zarracina/Vox

Feels like candy is everywhere today? You're not wrong. If you took all the candy that’s sold during Halloween week and turned it into a giant ball, like the one looming over the nation’s capital below, it’d be as large as six Titanics and weigh 300,000 tons. Find that and more spooky facts in Julia Belluz's deep dive into America's Halloween sweet tooth.

Kliff’s Notes

With research help from Caitlin Davis

Today's top news

  • “Brady rejects bid to repeal ObamaCare mandate in tax reform”: “House Ways and Means Chairman Kevin Brady (R-Texas) is rejecting a push by Sen. Tom Cotton (R-Ark.) to add a repeal of ObamaCare’s individual mandate to tax reform. Brady said in an interview with radio host Hugh Hewitt on Tuesday that he fears the move could jeopardize tax reform, a concern held by many Republicans.” —Peter Sullivan, the Hill
  • “Republicans drop Medicare premium hikes in children's health insurance bill”: “However, Democrats appear to still not be on board for the bill because of its cuts to Obamacare. The House is expected to vote this week on the bill that reauthorizes the program and funds community health centers for two years. House Republicans initially planned to pay for the CHIP reauthorization by raising Medicare premiums on seniors that made $500,000 or more.” —Robert King, Washington Examiner
  • “Trump opioid panel will recommend nationwide drug courts, tightened requirements for prescribers”: “President Trump’s commission on combating the opioid epidemic plans to encourage the federal government to establish drug courts in every federal judicial district, adjust reimbursement rates for addiction treatment, and streamline federal funding used by state and local governments to implement drug treatment and prevention programs, according to a draft of the panel’s final report.” —Lev Facher, STAT

Analysis and longer reads

  • “Backed by UnitedHealth, HHS nominee would now help oversee it”: “Five months after President Donald Trump nominated Stephen Parente to be an assistant secretary for Health and Human Services, the nation's largest health insurer quietly gave a $1.2 million gift to a tiny academic research center that Parente helped found and served as director over the past decade. Parente, who is still awaiting confirmation as HHS’ assistant secretary of planning and evaluation, for which he was nominated in April, would head an office that often assesses policies that affect the insurance industry.” —Dan Diamond, Politico
  • “How a Republican Idea for Reducing Medicare Costs Could Affect You”: “Premium support models take many forms, but there are two crucial variables. One is how stipend levels are set, which determines how much of beneficiaries’ own money they need to contribute. The other key feature of premium support is how much the stipend grows over time. Both aspects are hotly debated.” —Austin Frakt, New York Times
  • “Marketplace Mayhem”: “The combination of confused consumers, higher premiums and a federal administration that would like to see Obamacare dead leads many experts to believe enrollment will falter, creating financial headaches for hospitals and insurers. Insurers alone will have to eat $1 billion in costs this year because the Trump administration scrapped cost-sharing reduction subsidies.” —Shelby Livingston, Modern Healthcare

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