President Donald Trump plans to cut off subsidy payments to insurers selling Obamacare coverage in his most aggressive move yet to undermine the health care law, the White House said late Thursday.
The subsidies, which are worth an estimated $7 billion this year and are paid out in monthly installments, may stop almost immediately since Congress hasn’t appropriated funding for the program. POLITICO reported the development earlier Thursday, citing several sources.
The decision, leaked only a few hours after Trump signed an executive order calling for new regulations to encourage the rise of a raft of cheap, loosely regulated health plans, delivers a double blow to Obamacare after months of failed GOP efforts to repeal the law. With open enrollment for the 2018 plan year set to launch in two weeks, the moves seem aimed at dismantling the law through executive actions.
Scrapping the subsidy payments is likely to jolt already fragile Obamacare markets — although the impact may be less severe than it would have been a few months back. Many insurers had priced next year’s plans higher than they otherwise would have, fearing this outcome after months of threats from the White House. Others have already fled the Obamacare markets, which are set to begin open enrollment in Nov. 1 for the 2018 plan year.
In a statement issued Thursday night, White House Press Secretary Sarah Huckabee Sanders called the subsidies a “bailout of insurance companies,” citing it as “yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system.” The press secretary again called on Congress to end the “disastrous Obamacare law” through a replace and repeal bill.
“Certainly problematic markets are going to become more unstable,” said Greg Scott, who oversees Deloitte’s health plans consulting practice.
Trump has threatened for months to cut off the payments, deriding them as a “bailout” for insurers. While Republican lawmakers complained the subsidies were never properly appropriated by Congress, many were wary of ending them suddenly.
Failed Obamacare repeal packages considered by the House and Senate, H.R. 1628, included near-term funding for the program, which had been paid out through the executive branch each month.
The announcement, expected to be made Friday, may put more pressure on a bipartisan effort in the Senate’s health committee to preserve the subsidies to shore up Obamacare marketplaces.
“While I’m sure initial reactions will be negative, this might be the spark Congress needs to act on this issue,” said an insurance lobbyist who declined to be named. “There was no pressure before … That might actually be the silver lining.”
Even some Republican lawmakers expressed consternation Thursday night.
“Cutting health care subsidies will mean more uninsured in my district,” tweeted Rep. Ileana Ros-Lehtinen, a Florida Republican late Thursday. “@potus promised more access, affordable coverage. This does opposite.”
New York Attorney General Eric Schneiderman, who led a group of Democratic attorneys general to defend the subsidies in court this spring, said last night they would sue to stop the administration from acting.
“I will not allow President Trump to once again use New York families as political pawns in his dangerous, partisan campaign to eviscerate the Affordable Care Act at any cost,” he said in a prepared statement.
Some insurers are also likely sue the Trump administration over the failure to make payments that they believe they’re entitled to under the Affordable Care Act.
Trump has argued that Democrats will take the blame if the markets implode, but polling strongly suggests the public will point the finger at Republicans for Obamacare problems under Trump’s watch.
Dan Diamond contributed to this report.
Read more here: Trump will scrap critical Obamacare subsidy