Trump on tricky legal ground with ‘Obamacare’ threat
WASHINGTON — President Donald Trump’s threat to stop billions of dollars in government payments to insurers and force the collapse of “Obamacare” could put the government in a legal bind.
Law experts say he’d be handing insurers a solid court case, while undermining his own leverage to compel Democrats to negotiate, especially if premiums jump by 20 percent as expected after such a move.
“Trump thinks he’s holding all the cards. But Democrats know what’s in his hand, and he’s got a pair of twos,” said University of Michigan law professor Nicholas Bagley. Democrats “aren’t about to agree to dismantle the Affordable Care Act just because Trump makes a reckless bet.”
For months, the president has been threatening to stop payments that reimburse insurers for providing required financial assistance to low-income consumers, reducing their copays and deductibles.
Administration officials say the decision could come any day.
Playing defense, some insurers are preemptively raising premiums for next year. For example, BlueCross BlueShield of Arizona this week announced a 7.2 percent average hike for 2018. But there would likely be no increase if the subsidies are guaranteed, the company said. And BlueCross BlueShield of North Carolina earlier requested a 22.9 percent average increase. With the subsidies, the company said that would have been 8.8 percent.
The “cost-sharing” subsidies are under a legal cloud because of a dispute over whether the Obama health care law properly approved the payments. Other parts of the health care law, however, clearly direct the government to reimburse insurers.
With the issue unresolved, the Trump administration has been paying insurers each month, as the Obama administration had done previously.
Trump returned to the subject last week after the GOP drive to repeal the health care law fell apart in the Senate, tweeting, “As I said from the beginning, let ObamaCare implode, then deal. Watch!”
He elaborated in another tweet, “If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies...will end very soon!”
It’s not accurate to call the cost-sharing subsidies a bailout, said Tim Jost, a professor emeritus at Washington and Lee University School of Law in Virginia.
“They are no more a bailout than payments made by the government to a private company for building a bomber,” he said.
That’s at the root of the Trump administration’s potential legal problem if the president makes good on this threat.
The health law clearly requires insurers to help lowincome consumers with their copays and deductibles. Nearly 3 in 5 HealthCare.gov customers qualify for the assistance, which can reduce a deductible of $3,500 to several hundred dollars. The annual cost to the government is about $7 billion.
The law also specifies that the government shall reimburse insurers for the cost-sharing assistance that they provide.
Nonetheless, the payments remain under a cloud because of a disagreement over whether they were properly approved in the health law, by providing an “appropriation.”
The Constitution says the government shall not spend money without a congressional appropriation.
Think of an appropriation as an electronic instruction to your bank to pay a recurring monthly bill. You fully intend to pay, and the money you’ve budgeted is in your account. But the payment will not go out unless you specifically direct your bank to send it.
House Republicans trying to thwart the ACA sued the Obama administration in federal court in Washington, arguing that the law lacked specific language appropriating the cost-sharing subsidies.
A district court judge agreed with House Republicans, and now the case is on hold before the U.S. appeals court in Washington. A group of state attorneys general asked the court earlier this year to let them join the case in defense of the subsidies, and on Tuesday the court agreed. House Republicans had opposed the states’ participation, but the court said the group had “demonstrated the appropriateness of their intervention in this case.”