Obamacare subsidy threat smacks of a shakedown
Ever since House Republicans balked at a plan to end health insurance for 24 million Americans by repealing Obamacare, President Trump has been casting around for alternative strategies.
One idea is to take another crack at legislation. To that end, Republicans have spent recent days struggling to craft a plan that hard-line conservatives and more moderate members could back.
Another idea is to sabotage President Obama’s signature legislation by blocking funds for cost-sharing subsidies that help lower-income people purchase insurance.
“Obamacare is dead next month if it doesn’t get that money,” Trump told The Wall Street Journal.
If Trump is trying to sound like a movie gangster, he’s doing a pretty good job. Translated into filmspeak, his remarks would go something like this: “Gee, you have such a lovely family. It would be a shame if something happened to them.”
Over the weekend, Trump and his aides took their extortion scheme a step further, explicitly linking the subsidy payments to the budget talks aimed at averting a partial government shutdown at the end of this week. The administration would fund the insurance subsidies, officials said, only if congressional Democrats agree to a down payment on Trump’s Southern border wall (the one Mexico is supposed to pay for).
That’s a bad deal. The subsidies aren’t a favor for Democrats. They’re a lifeline for people who need care. Cutting them off could have a devastating impact.
According to the Kaiser Family Foundation, 12.2 million people buy insurance on individual exchanges; 58% of them rely on subsidies to save as much as $3,545 annually on medical and drug deductibles and $5,587 on out-of-pocket maximums. The average premium, if the subsidies were to be cut off, would rise by 9% in North Dakota, the least affected state, and 27% in Missis- sippi, the most affected state.
Were Trump to cut off costsharing subsidies, he and his fellow Republicans would be blamed for destabilizing the insurance markets that millions of individuals and small businesses rely on to purchase coverage.
In theory, Republicans are opposed to these cost-sharing subsidies. In 2014, they even filed a lawsuit challenging the payments’ constitutionality on the grounds that they should be the subject of annual appropriations — an argument that ignores the fact that most federal spending goes toward benefit programs that operate on autopilot.
But since the GOP “repeal and replace” bill ran aground in the House, there has been no effort to revive the suit. In fact, some Republicans have publicly stated that Congress should appropriate money for the program.
Trump has also been hearing from insurance companies, which argue that his ruminations about cutting off cost-sharing subsidies, as well as his executive order to soften the mandate that all individuals have coverage, are likely to drive up health care costs.
The situation is pretty clear for Trump: He could make some conservatives happy by cutting off the funding. But that would come at a terrible cost to millions of Americans and, potentially, to his own presidency.