After months of pinning the blame for Obamacare’s shortcomings on Democrats and watching his own party fail to act, President Donald Trump’s decision late Thursday to end government subsidies to insurers to help lower-income Americans afford to use their coverage under the Affordable Care Act was the most drastic step he’s taken to undermine his predecessor’s signature achievement.
It also lobbed a live bomb into the laps of Republican lawmakers 13 months before congressional elections after he publicly berated the party’s Senate leadership for being unable to keep a longstanding promise to repeal the law.
The move kicks down one of the pillars of a law designed to cut the number of uninsured Americans and disrupts the healthcare industry, which accounts for 17 percent of the U.S. economy.
While the administration already had been taking steps to undermine insurance marketplaces, such as slashing advertising and outreach budgets to bolster enrollment in Obamacare plans, Trump is assuming a major political risk by putting his fingerprints directly on one that potentially will spike insurance premiums for thousands of voters.
Trump suggested he was trying to force negotiations with Democrats on a healthcare plan that could pass muster with the Republican majorities in the House and Senate. “What would be nice is if the Democratic leaders should come over to the White House,” he told reporters Friday. “If they came over, maybe we could make a deal.”
But if no fix emerges before the 2018 congressional elections, Republicans may have a hard time convincing voters to hold Democrats responsible when they control the Senate, House and White House.
Senator Ted Cruz of Texas warned fellow Republicans at a meeting for conservative donors that they faced a “bloodbath” in next year’s election if they don’t deliver results on health care and tax cuts.
Adding to the political peril, the battle increases the odds of a government shutdown when agency spending authority expires on December 8. Democrats are all but certain to demand a resumption of the cost-sharing reduction subsidies in exchange for their support in any final spending agreement. The administration, meanwhile, is signaling it won’t go for what Trump called “payoff to insurance companies” or any other Obamacare fix without getting something in return.
While Trump has called the Affordable Care Act a “nightmare,” polls show the public disagrees. Two-thirds of Americans say they want the president to work with Congress to improve the Affordable Care Act, according to a poll from the Kaiser Family Foundation conducted before Trump’s action was announced.
The most prominent proposal to fix the law was being crafted by Republican Senator Lamar Alexander of Tennessee and Democratic Senator Patty Murray of Washington. The pair has been working on a measure that would combine continued cost-sharing subsidies with added flexibility for states to determine the offerings in the individual insurance market. They were making progress in recent weeks, although Alexander said last week that it was vital that they not only agree on their own proposal but also assure party leaders that there was consensus among other lawmakers.
Even if Senate Majority Leader Mitch McConnell were to allow a vote on the Senate floor, conservative opponents would likely filibuster the measure and slow debate.
There also is broad opposition to allowing the subsidy payments in the Republican-controlled House. Under former Republican Speaker John Boehner, the House in 2014 successfully challenged in federal court the Obama administration’s decision to make them without an appropriation from Congress. That decision is being appealed.
Trump’s budget director Mick Mulvaney said in an interview Friday that Trump won’t support the Alexander-Murray proposal as it stands or without getting a significant concession on funding for other priorities.
The individuals who will be hardest hit by the president’s decision to cut off the cost-sharing subsidies aren’t the low-income people who receive the help—insurers are required to continue offering them lower deductibles and copays, even if the government funding ends.
Instead, it’ll be middle-income people who buy their own health insurance without subsidies who will bear the burden. That group numbers roughly 8 million, compared to about 10 million who do get subsidies. They’ll face higher insurance prices for 2018, because insurers will recoup their subsidy shortfall by raising premiums.
“Ironically, it is these unsubsidized folks who have complained the loudest about Obamacare’s big premiums and deductibles,” said Robert Laszewski, who runs Health Policy and Strategy Associates. “They will now have even more to complain about.”
Already, insurers in many states are planning to charge higher premiums next year in anticipation that the cost-sharing payments would end. The administration has been threatening to cut them off for months. In some cases, state regulators structured those cost increases to fall mainly on individuals who get subsidies, helping protect everyone else.
Where Democrats saw deliberate sabotage, Republicans saw vindication.
“Obamacare has proven itself to be a fatally flawed law, and the House will continue to work with Trump administration to provide the American people a better system,” House Speaker Paul Ryan said in a statement.
Senate Minority Leader Chuck Schumer told reporters on a conference call that withdrawing the subsidies is “one of the worst things the president could do to sabotage our healthcare system.” Ending them, the New York Democrat said, would cause premiums to jump by 20 percent to 25 percent and likely will result in more Americans living in counties that have no insurers offering policies in the individual market.
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