It was an early morning for a seemingly excited, insomniac Donald Trump, who shortly before 6am tweeted on the topic of the night, namely the late Thursday elimination of subsidies to health insurers, which took place just hours after the president signed an executive order to designed to draw people away from Obamacare coverage markets.
“The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”
The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!
— Donald J. Trump (@realDonaldTrump) October 13, 2017
As reported last night, late on Thursday, the Trump administration said it would immediately stop paying what are known as cost-sharing reduction, or CSR, subsidies. The payments, which have been a subject of legal dispute during the Obama administration, go to health insurers in the Affordable Care Act to help lower-income people with co-pays and other cost sharing. Without them, insurers have said they’ll dramatically raise premiums or pull out of the law’s state-based markets, as Bloomberg reports.
Ahead of the White House announcement, and given the disagreements over the payments including ongoing lawsuit questioning their legality, many health insurers had dramatically raised the premiums they planned to charge for next year in anticipation of not getting the funds. The payments are made monthly, and have been estimated at $7 billion in total this year. “Many, but not all, insurers assumed these payments would end and set 2018 premiums accordingly,” Larry Levitt, a senior vice president at the Kaiser Family Foundation, said by email. “Those that didn’t build this into their premiums may petition to adjust their rates or threaten to pull out of the marketplace. It seems like we’re in for a chaotic run up to the beginning of open enrollment.”
The White House said the Department of Justice and the Department of Health and Human Services both concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under 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,” the White House said in the statement.
Separately, acting HHS Secretary Eric Hargan and Centers for Medicare and Medicaid Services Administrator Seema Verma said in a statement that the payments will stop immediately, with no transition period. They next payments were due next week. “Congress has not appropriated money for CSRs, and we will discontinue these payments immediately,” the department said.
Democrats immediately slammed the decision: “Instead of working to lower health costs for Americans, it seems President Trump will singlehandedly hike Americans’ health premiums. It is a spiteful act of vast, pointless sabotage,” the Democrats said in a statement.
Meanwhile, House Speaker Paul Ryan backed the move. “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,” Ryan said in a statement.
And while Trump may (or may not be) hoping that Democrats will promptly reach out to “fix” the current unstable equilibrium, what he has done in effect is to own Obama’s mess, as any subsequent surges in insurance premiums will now be “Trump’s fault.”
What is more apropos, however, is that having once again slammed the Democrats’ most precious law, suddenly the spectre of a government shutdown, and failure to reach a long-term debt ceiling deal on December 8 when the current temporary arrangement runs out, is back front and center, along with the associated risks to various capital markets.