Trump to now halt Obamacare subsidies
No payments to insurers could kill law
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 lowerincome Americans afford coverage. The decision follows an executive order 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.
The White House said it cannot legally continue to pay the so-called cost-sharing subsidies because they lack a formal authorization by Congress. The administration has been making the payments from month to month, even as Trump threatened to cut them off to force Democrats to negotiate over health care.
The president’s action is likely to trigger a lawsuit from state attorneys general, who contend the
subsidies to insurers are fully authorized by federal law.
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.”
While the administration will now 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 domesticpolicy 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 four-fifths of the 10 million Americans with ACA coverage.
Word of the president's decision, which was first reported by Politico, 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 healthcare policies of the Obama administration, a central promise since last year's presidential campaign.
Critics, who include state insurance commissioners, most of the healthinsurance industry and mainstream policy specialists, predict that a proliferation of these other kinds of coverage will have damaging ripple effects, driving up costs for consumers with serious medical conditions and prompting more insurers to flee the law's marketplaces. Part of Trump's action, they say, will spark court challenges over its legality.
The most far-reaching element of the order instructs a trio of Cabinet departments to rewrite federal rules for “association health plans” — a form of insurance in which small businesses of a similar type band together through an association to negotiate health benefits. These plans have had to meet coverage requirements and consumer protections under the 2010 health-care law, but the administration is likely to exempt them from those rules and let such plans be sold from state to state without insurance licenses in each one.