President Trump will end key payments to insurers selling ObamaCare plans, the White House announced late Thursday, marking Trump’s most aggressive move yet to dismantle the law after multiple GOP efforts to repeal and replace it failed this year.
The Trump administration has continued making the the disbursements to insurers, known as cost-sharing reduction payments, on a monthly basis. But Trump had consistently threatened to end the payments, which are worth an estimated $7 billion this year.
“Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare. In light of this analysis, the Government cannot lawfully make the cost-sharing reduction payments,” the White House said in a statement late Thursday night.
The payments were created as part of the Affordable Care Act but were then the subject of a lawsuit by House Republicans during the Obama administration. A federal court ruled the payments were being made illegally, but the Obama administration appealed.
Congress could still decide to appropriate the payments, and there is bipartisan agreement that they should be made. But no action has been taken, and some Republicans are hesitant to vote for what they see as a bailout of ObamaCare.
“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. Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people,” White House press secretary Sarah Huckabee Sanders said.
The administration’s decision is likely to lead to lawsuits. It also puts enormous pressure on lawmakers to reach a deal on funding the payments, adding yet another partisan battle to an already full calendar.
Senate Minority Leader Charles Schumer (D-N.Y.) and House Minority Leader Nancy Pelosi (D-Calif.) issued a joint statement calling the decision a “spiteful act of vast, pointless sabotage … now, millions of hard-working American families will suffer just because President Trump wants them to.”
Meanwhile, Speaker Paul Ryan (R-Wis.) praised the decision to end the Obama administration’s appeal of the subsidies.
“Today’s decision … preserves a monumental affirmation of Congress’s authority and the separation of powers,” Ryan said in a statement. “Obamacare has proven itself to be a fatally flawed law, and the House will continue to work with the Trump administration to provide the American people a better system.”
Cutting off the subsidies could throw the ObamaCare marketplace into chaos.
The Congressional Budget Office (CBO) said in August that about 1 million additional people would be uninsured in 2018 and insurance companies would raise premium prices by about 20 percent for ObamaCare plans if the payments were cut off.
The CBO also said halting the payments would increase the federal deficit by $194 billion through 2026, largely because federal assistance to buy ObamaCare plans rises when premiums do.
The payments help low-income people afford co-pays, deductibles and other out-of-pocket costs associated with health insurance policies. Insurers have called the payments critical, saying that without them, they would have to massively increase premiums or exit the individual market.
Many insurers have already priced their plans for the coming open enrollment period, which begins Nov. 1.
The leaders of Senate Health Committee have been working toward a bipartisan deal to fund the payments for two years in order to stabilize the markets in the short term.
But progress was halted when lawmakers tried to pass a last-ditch ObamaCare repeal bill from Sens. Lindsey Graham (R-S.C.) and Bill Cassidy (R-La.) last month, and the sides have still not reached an agreement.
The decision on the payments comes after Trump on Thursday signed an executive order aimed at loosening ObamaCare restrictions on insurance plans, which also could help destabilize the law.