Trump to scrap health insurers’ subsidies in blow to Obamacare
WASHINGTON — President Donald Trump is throwing a bomb into the insurance marketplaces created under the Affordable Care Act, choosing to end critical payments to health insurers that help millions of lower-income Americans afford coverage. The decision follows an executive order on Thursday to allow alternative health plans that skirt the law’s requirements.
The White House confirmed late Thursday that it would halt federal payments for cost-sharing reductions, although a statement did not specify when. According to two people briefed on the decision, the cutoff will be as of November. The subsidies total about $7 billion this year.
Trump has threatened for months to stop the payments, which help eligible consumers afford their deductibles and other out-ofpocket expenses, but held
off while other administration officials warned him that such a move would cause an implosion of the ACA marketplaces that could be blamed on Republicans.
Health insurers and state regulators have been in high anxiety over the prospect of the marketplaces cratering because of such White House action. The fifth year’s open-enrollment season for consumers to buy coverage through ACA exchanges will open in less than three weeks, and insurers have said that stopping the cost-sharing payments would be the single greatest step the Trump administration could take to harm the marketplaces — and the law.
Ending the payments is grounds for any insurer to back out of its federal contract to sell health plans for 2018.
The cost-sharing reductions have long been the subject of a political and legal seesaw. Congressional Republicans argued that the sprawling 2010 health care law that established the subsidies does not include specific language providing appropriations to cover the government’s cost. House Republicans sued HHS over the payments during former President Barack Obama’s second term. A federal court agreed that they were illegal, and the case has been pending before the U.S. Court of Appeals for the D.C. Circuit.
“The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system,” a statement from the White House said. “Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people.”
For months, administration officials have debated privately about what to do. The president has consistently pushed to cut them off, according to officials and advisers who spoke on the condition of anonymity to discuss private conversations. Some top health officials within the administration, including former Health and Human Services Secretary Tom Price, cautioned that this could exacerbate already escalating premiums on the ACA market, these Republicans said.
But some government lawyers also argued that the payments were not authorized under the existing law, according to one official, and would be difficult to keep defending in court.
While the administration now will argue that Congress should appropriate the funds if it wants them to continue, such a proposal will face a serious hurdle on Capitol Hill. In a recent interview, Rep. Tom Cole, R-Okla., who chairs the House Appropriations Subcommittee overseeing HHS, said it would be difficult to muster support for such a move among House conservatives.
One person familiar with the president’s decision said that HHS officials and Trump’s domestic policy advisers had urged him to continue the payments at least through the end of the year.
The cost-sharing payments are separate from a different subsidy that provides federal assistance on premiums to more than fourfifths of the 10 million Americans with ACA coverage.
Word of the president’s decision came just hours after he signed the executive order intended to circumvent the ACA by making it easier for individuals and small businesses to buy alternative types of health insurance with lower prices, fewer benefits and weaker government protections.
The White House and allies portrayed the president’s move as wielding administrative powers to accomplish what congressional Republicans have failed to achieve: fostering more coverage choices while tearing down the law’s insurance marketplaces. Until the White House’s announcement late Thursday, the executive order represented Trump’s biggest step to date to reverse the health care policies of the Obama administration, a central promise since last year’s presidential campaign.
President Trump signed an executive order Thursday that allows for cheaper, less regulated health plans.