Trump to end ACA sub­si­dies

MOVE COULD IM­PLODE MAR­KET­PLACES An ear­lier or­der un­der­cuts key Oba­macare rules


Pres­i­dent 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 co­in­cides with 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. An­other state­ment a short time later by top of­fi­cials at the Health and Hu­man Ser­vices Depart­ment said the cut­off would be im­me­di­ate. The sub­si­dies to­tal about $7 bil­lion this year.

Trump has threat­ened for months to stop the pay­ments, which go to in­sur­ers that are re­quired by the law to help el­i­gi­ble con­sumers af­ford their de­ductibles and other out-of-pocket ex­penses. But he held off while other ad­min­is­tra­tion of­fi­cials warned him such a move would cause an im­plo­sion of the ACA mar­ket­places that could be blamed on Repub­li­cans, ac­cord­ing to two in­di­vid­u­als briefed on

the de­ci­sion.

Health in­sur­ers and state reg­u­la­tors have been in a state of 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 start 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 dam­age 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. Some states’ reg­u­la­tors di­rected ACA in­sur­ers to add a sur­charge in case the pay­ments were not made, but in­sur­ers else­where could be left in a po­si­tion in which they still must give con­sumers the dis­counts but will not be re­im­bursed.

A spokes­woman for Amer­ica’s Health In­sur­ance Plans, an in­dus­try trade group that has been warn­ing for months of ad­verse ef­fects if the pay­ments ended, im­me­di­ately de­nounced the pres­i­dent’s de­ci­sion. “Mil­lions of Amer­i­cans rely on th­ese ben­e­fits to af­ford their cov­er­age and care,” Kris­tine Grow said.

And Cal­i­for­nia At­tor­ney Gen­eral Xavier Be­cerra (D), who has been try­ing to pre­serve the pay­ments through lit­i­ga­tion, said the pres­i­dent’s ac­tion “would be sab­o­tage.” Be­cerra said late Thurs­day that he was pre­pared to fight the White House. “We’ve taken the Trump Ad­min­is­tra­tion to court be­fore and won, and we’re ready to do it again if nec­es­sary,” he said in a state­ment.

Trump’s move comes even as bi­par­ti­san ne­go­ti­a­tions con­tinue on one Sen­ate com­mit­tee over ways to prop up the ACA mar­ket­places. Both Sens. La­mar Alexan­der (R-Tenn.) and Patty Mur­ray (D-Wash.) have pub­licly said the pay­ments should not end im­me­di­ately, though they dif­fer over how long th­ese sub­si­dies should be guar­an­teed.

The cost-shar­ing re­duc­tions — or CSRs, as they are known — have long been the sub­ject of a po­lit­i­cal and le­gal see­saw. Con­gres­sional Repub­li­cans ar­gued that the sprawl­ing 2010 health­care law that es­tab­lished them does not in­clude spe­cific lan­guage pro­vid­ing ap­pro­pri­a­tions to cover the govern­ment’s cost. House Repub­li­cans sued HHS over the pay­ments dur­ing 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.”

House Speaker Paul D. Ryan (R-Wis.) said in a state­ment that the ad­min­is­tra­tion was drop­ping its ap­peal of the law­suit — some­thing the White House did not men­tion in its an­nounce­ment. Ryan called the move to end to the court case “a mon­u­men­tal af­fir­ma­tion of Con­gress’s author­ity and the sep­a­ra­tion of pow­ers.”

Mean­while, the top two con­gres­sional Democrats, House Mi­nor­ity Leader Nancy Pelosi (Calif.) and Sen­ate Mi­nor­ity Leader Charles E. Schumer (N.Y.), ex­co­ri­ated the pres­i­dent’s de­ci­sion. “It is a spite­ful act of vast, point­less sab­o­tage lev­eled at work­ing fam­i­lies and the mid­dle class in ev­ery cor­ner of Amer­ica,” they said in a joint state­ment. “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.”

For months, ad­min­is­tra­tion of­fi­cials have de­bated pri­vately about what to do. The pres­i­dent has con­sis­tently pushed to stop the pay­ments, 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 HHS sec­re­tary Tom Price, cau­tioned that this could ex­ac­er­bate al­ready es­ca­lat­ing ACA plan pre­mi­ums, th­ese Repub­li­cans said. But some govern­ment lawyers ar­gued that the pay­ments were not au­tho­rized un­der the ex­ist­ing law, ac­cord­ing to one ad­min­is­tra­tion of­fi­cial, and would be dif­fi­cult to keep defending in court.

Act­ing HHS sec­re­tary Eric Har­gan and Seema Verma, ad­min­is­tra­tor of the depart­ment’s Cen­ters for Medi­care and Med­i­caid Ser­vices, said they were stop­ping the pay­ments based on a le­gal opin­ion by At­tor­ney Gen­eral Jeff Ses­sions. “It has been clear for many years that Oba­macare is bad pol­icy. It is also bad law,” their state­ment says. “The Obama Ad­min­is­tra­tion un­for­tu­nately went ahead and made CSR pay­ments to in­sur­ance com­pa­nies af­ter re­quest­ing — but never ul­ti­mately re­ceiv­ing — an ap­pro­pri­a­tion from Con­gress as re­quired by law.”

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 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 with pre­mi­ums to more than four-fifths 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.

Crit­ics, who in­clude state in­sur­ance com­mis­sion­ers, most of the health-in­sur­ance 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 health­care 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.

In ad­di­tion, the or­der is de­signed to ex­pand the avail­abil­ity of short-term in­sur­ance poli­cies, which of­fer lim­ited ben­e­fits as a bridge for peo­ple between jobs or young adults no longer el­i­gi­ble for their par­ents’ health plans. The Obama ad­min­is­tra­tion ruled that short-term in­sur­ance may not last for more than three months; Trump wants to ex­tend that to nearly a year.

Trump’s ac­tion also is in­tended to widen em­ploy­ers’ abil­ity to use pre­tax dol­lars in “health re­im­burse­ment ar­range­ments” to help work­ers pay for any med­i­cal ex­penses, not just for health poli­cies that meet ACA rules — an­other re­ver­sal of Obama pol­icy.

In a late-morn­ing sign­ing cer­e­mony in the White House’s Roo­sevelt Room, sur­rounded by sup­port­ive small-busi­ness own­ers, Cabi­net mem­bers and a few Repub­li­cans from Capi­tol Hill, the pres­i­dent spoke in his char­ac­ter­is­tic su­perla­tives about the ef­fects of his ac­tion and what he called “the Oba­macare night­mare.”

Trump said that Thurs­day’s move, which will trig­ger months of reg­u­la­tory work by fed­eral agen­cies, “is only the be­gin­ning.” He promised “even more re­lief and more free­dom” from ACA rules. And although lead­ing GOP law­mak­ers are ea­ger to move on from their un­suc­cess­ful at­tempts this year to abol­ish cen­tral facets of the 2010 law, Trump said that “we are go­ing to pres­sure Con­gress very strongly to fin­ish the re­peal and re­place of Oba­macare.”

The ex­ec­u­tive or­der will ful­fill a quest by con­ser­va­tive Re­pub­li­can law­mak­ers, es­pe­cially in the House, who have tried for more than two decades to ex­pand the avail­abil­ity of as­so­ci­a­tion health plans by al­low­ing them to be sold, un­reg­u­lated, across state lines. On the other hand, Trump’s ap­proach con­flicts with what he and GOP lead­ers in Con­gress have held out as a main health-pol­icy goal — giv­ing each state more dis­cre­tion over mat­ters of in­sur­ance.

Health pol­icy ex­perts in think tanks, academia and the health­care in­dus­try pointed out that the or­der’s lan­guage is fairly broad, so the en­su­ing fine print in agen­cies’ rules will de­ter­mine whether the im­pact will be as sweep­ing or quick as Trump boasted — his di­rec­tive will pro­vide “mil­lions of peo­ple with Oba­macare re­lief,” he said.

Sig­nif­i­cant ques­tions that re­main in­clude whether in­di­vid­u­als will be able to join as­so­ci­a­tions, a point that could raise le­gal is­sues; whether the ad­min­is­tra­tion will start to let as­so­ci­a­tion health plans count to­ward the ACA’s re­quire­ment that most Amer­i­cans carry in­sur­ance; and whether such plans can charge higher prices to small busi­nesses with sicker work­ers — or refuse to in­sure them.

A se­nior ad­min­is­tra­tion of­fi­cial, speak­ing to re­porters on the con­di­tion of anonymity shortly be­fore Trump signed the or­der, said that the pol­icy changes it sets in mo­tion will re­quire agen­cies to fol­low cus­tom­ary pro­ce­dures to write new rules and so­licit pub­lic com­ment. That means new in­sur­ance op­tions will not be avail­able in time for cov­er­age be­gin­ning in Jan­uary, he said.

Among pol­icy ex­perts, crit­ics warned that young and healthy peo­ple who use rel­a­tively lit­tle in­sur­ance will grav­i­tate to as­so­ci­a­tion health plans be­cause of their lower price tags. That would con­cen­trate older and sicker cus­tomers in ACA mar­ket­places with spik­ing rates.

Sell­ing health plans from state to state with­out sep­a­rate li­censes — the idea un­der­ly­ing much of the pres­i­dent’s or­der — has long been a Re­pub­li­can mantra. It has gained lit­tle trac­tion in prac­tice, how­ever.

Half a dozen states — be­fore the ACA was passed in 2010 as well as since then — have passed laws per­mit­ting in­sur­ers to sell health poli­cies ap­proved by other states. And since last year, the ACA has al­lowed “com­pacts” in which groups of states can agree that health plans li­censed in any of them could be sold in the oth­ers. Un­der such com­pacts, fed­eral health of­fi­cials must make sure the plans of­fer at least the same ben­e­fits and are as af­ford­able as those sold in the ACA mar­ket­places.

As of this sum­mer, “no state was known to ac­tu­ally of­fer or sell such poli­cies,” ac­cord­ing to a re­port by the Na­tional Con­fer­ence of State Leg­is­la­tures. A main rea­son, ex­perts say, is in­sur­ers’ dif­fi­culty in ar­rang­ing net­works of doc­tors and other providers of care far from their home states.

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