CBO Estimate Shows Ending ACA Subsidies Would Harm Small Businesses, Destabilize Health Marketplaces

For Immediate Release: 
Tuesday, August 15, 2017

Statement from Small Business Majority Founder & CEO John Arensmeyer in response to today’s Congressional Budget Office score showing insurance premiums would increase by 20 percent on average next year if the federal government stops paying cost-sharing subsidies that support the Affordable Care Act marketplaces

The Congressional Budget Office (CBO) today released its report on the fiscal and practical impacts of a potential decision by the federal government to discontinue paying cost-sharing subsidies to insurance companies as part of the Affordable Care Act (ACA). The report indicates that ending the subsidies would cause insurance premiums to skyrocket by 20 percent on average next year and 25 percent by 2020, which would harm small businesses by destabilizing the health insurance markets and leaving many entrepreneurs and small business employees unable to afford coverage.  

Under the healthcare law, insurance companies receive cost-sharing subsidies from the federal government in order to lower the deductibles and co-pays for low-income enrollees. Although the federal government is likely required by law to pay these subsidies, President Trump has indicated that he would like to stop issuing them as part of a politically motivated quest to destroy the ACA. In addition to raising premiums, the CBO report finds this would increase the federal deficit by $194 billion because consumers would need additional tax credits to offset their premiums and it would cause one million people to lose their health insurance coverage.

Eliminating these subsidies would also likely result in a mass exodus by insurance companies from the individual market, meaning an unknown number of entrepreneurs would be unable to afford health coverage for themselves and their employees, while aspiring entrepreneurs would be unable to start a new business at all because they won’t be able to access affordable health coverage. After all, a recent U.S. Treasury Department study found 1 in 5 marketplace participants in 2014 was a small business owner or self-employed.    

President Trump must understand that killing the ACA by any means necessary is a win for no one. Small business owners nationwide depend on provisions of the ACA for quality and affordable insurance coverage, which is why the law must be strengthened rather than undermined. Small employers demand that President Trump guarantee these payments and ensure America’s job creators have access to the health coverage they need.


About Small Business Majority

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