Trump to halt sub­si­dies to health in­sur­ers

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WASH­ING­TON — In a brash move likely to roil in­sur­ance mar­kets, Pres­i­dent Don­ald Trump plans to halt pay­ments to in­sur­ers un­der the Obama-era health care law he has been try­ing to un­ravel for months.

Two peo­ple fa­mil­iar with the de­ci­sion de­scribed the plan late Thurs­day night, seek­ing anonymity be­cause they were not au­tho­rized to speak pub­licly.

The White House said in a state­ment that the govern­ment can­not legally con­tinue to pay the so-called cost­shar­ing sub­si­dies be­cause they lack a for­mal au­tho­riza­tion by Con­gress. How­ever, the ad­min­is­tra­tion had been mak­ing the pay­ments from month to month, even as Trump threated 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, and say the pres­i­dent’s po­si­tion is reck­less. Among the likely con­se­quences: a spike in pre­mi­ums for next year.

The top two Democrats in Con­gress sharply de­nounced the Trump plan in a joint state­ment.

“It is a spite­ful act of vast, point­less sab­o­tage lev­eled at work­ing fam­i­lies and the mid­dle class in ev­ery cor­ner of Amer­ica,” said House and Sen­ate Demo­cratic lead­ers Nancy Pelosi of Cal­i­for­nia and Chuck Schumer of New York. “Make no mis­take about it, Trump will try to blame the Af­ford­able Care Act, but this will fall on his back and he will pay the price for it.”

Word of Trump’s plan came on a day when the pres­i­dent had also signed an ex­ec­u­tive or­der di­rect­ing govern­ment agen­cies to de­sign in­sur­ance plans that would of­fer lower pre­mi­ums out­side the re­quire­ments of Pres­i­dent Barack Obama’s Af­ford­able Care Act.

Frus­trated over set­backs in Con­gress, Trump is wield­ing his ex­ec­u­tive pow­ers to bring the “re­peal and re­place” de­bate to a head. He ap­pears to be fol­low­ing through on his vow to pun­ish Democrats and in­sur­ers af­ter the fail­ure of GOP health care leg­is­la­tion.

On Twit­ter, Trump has termed the pay­ments to in­sur­ers a “bailout,” but it’s un­clear if the pres­i­dent will get Democrats to ne­go­ti­ate by stop­ping pay­ment.

Ex­perts have warned that cut­ting off the money would lead to a dou­ble-digit spike in pre­mi­ums, on top of in­creases in­sur­ers al­ready planned for next year. That would de­liver an­other blow to mar­kets around the coun­try al­ready frag­ile from in­sur­ers ex­it­ing and costs ris­ing. In­sur­ers, hospi­tals, doc­tors’ groups, state of­fi­cials and the U.S. Cham­ber of Com­merce have urged the ad­min­is­tra­tion to keep pay­ing.

Lead­ing GOP law­mak­ers have also called for con­tin­u­ing the pay­ments to in­sur­ers, at least tem­po­rar­ily, so con­stituents main­tain ac­cess to health in­sur­ance. Sen­ate Health, Ed­u­ca­tion, La­bor and Pen­sions Com­mit­tee Chair­man La­mar Alexan­der, R-Tenn., is work­ing on such leg­is­la­tion with Demo­cratic Sen. Patty Mur­ray of Wash­ing­ton.

The so-called “cost­shar­ing” sub­si­dies de­fray out-of-pocket ex­penses for peo­ple with low-to-mod­est in­comes, and can re­duce a de­ductible of $3,500 to a few hun­dred dol­lars. As­sis­tance is avail­able to con­sumers buy­ing in­di­vid­ual poli­cies; peo­ple with em­ployer cov­er­age are un­af­fected by the dis­pute.

Nearly 3 in 5 Health­Care. gov cus­tomers qual­ify for help, an es­ti­mated 6 mil­lion peo­ple or more. The an­nual cost to the govern­ment is cur­rently about $7 bil­lion.

But the sub­si­dies have been un­der a le­gal cloud be­cause of a dis­pute over whether the Obama health care law prop­erly ap­proved the pay­ments to in­sur­ers. Adding to the con­fu­sion, other parts of the Af­ford­able Care Act clearly di­rect the govern­ment to re­im­burse the car­ri­ers.

For ex­am­ple, the ACA re­quires in­sur­ers to help low-in­come con­sumers with their co­pays and de­ductibles.

And the law also spec­i­fies that the govern­ment shall re­im­burse in­sur­ers for the cost-shar­ing as­sis­tance that they pro­vide.

But there’s dis­agree­ment over whether the law prop­erly pro­vided a con­gres­sional “ap­pro­pri­a­tion,” sim­i­lar to an in­struc­tion to pay. The Con­sti­tu­tion says the govern­ment shall not spend money un­less Con­gress ap­pro­pri­ates 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 the case has been on hold be­fore the U.S. ap­peals court in Wash­ing­ton. Up to this point the Trump ad­min­is­tra­tion con­tin­ued mak­ing the monthly pay­ments, as the Obama ad­min­is­tra­tion had done. The round of pay­ments would be due around Oct. 20.

A panel of ap­pel­late judges re­cently ruled that a group of states can de­fend the le­gal­ity of the sub­si­dies if the Trump ad­min­is­tra­tion de­cides to stop pay­ing.

While the le­gal is­sue seems ar­cane, the im­pact on con­sumers would be real.

The Con­gres­sional Bud­get Of­fice es­ti­mated that pre­mi­ums for a stan­dard “sil­ver” plan will in­crease by about 20 per­cent with­out the sub­si­dies. In­sur­ers can re­cover the cost-shar­ing money by rais­ing pre­mi­ums, since those are also sub­si­dized by the ACA, and there’s no le­gal ques­tion about their ap­pro­pri­a­tion.

Con­sumers who re­ceive tax cred­its un­der the ACA to pay their pre­mi­ums would be shielded from those pre­mium in­creases.

But mil­lions of oth­ers buy in­di­vid­ual health care poli­cies with­out any fi­nan­cial as­sis­tance from the govern­ment and could face pro­hib­i­tive in­creases. It’s also es­ti­mated that tax­pay­ers would end up spend­ing more to sub­si­dize pre­mi­ums.

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