Washington DC — Going into this week's federal budget battle, the White House toyed with a hardball tactic to force congressional Democrats to negotiate on President Donald Trump's priorities.
They just might eliminate billions of dollars in disputed "Obamacare" subsidies.
But a study out Tuesday from a nonpartisan group suggests that could backfire. Stopping the Affordable Care Act payments at issue may actually wind up costing the federal government billions more than it would save.
It adds up to an estimated $2.3 billion more in 2018, or an additional $31 billion over 10 years.
The Kaiser Family Foundation found that taxpayers would end up paying 23 percent more than the potential savings from eliminating the health law's "cost-sharing" subsidies, which help low-income people with insurance deductibles and co-payments.
How's that possible? The short answer is that insurers would still be free to raise premiums, driving federal spending even higher on a separate subsidy provided under the program.
"You end up with a counter-intuitive result," said Larry Levitt, one of the study's authors. Former Congressional Budget Office director Douglas Holtz-Eakin, a Republican economist, reviewed the Kaiser study for The Associated Press and concurred.
"I think this may even be a conservative estimate," he said. "It says what's at stake: double-digit premium increases and more money out of the Treasury, not less."