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Popular vote loser Donald Trump is on a rage binge, taking out a very big chunk of his aggressions on the American public by doing what he can to destroy the Affordable Care Act. On Thursday he issued executive orders intended to weaken Obamacare markets by siphoning off healthy participants into cheaper, skimpier plans. Now, Politico reports, he's pulling the plug on cost-sharing reduction payments to insurers.
The decision, which leaked out only hours after Trump signed an executive order calling for new regulations to encourage cheap, loosely regulated health plans—delivered a double whammy 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.
Press Secretary Sarah Huckabee Sanders confirmed the decision in a statement emailed to reporters at 10:47 p.m. Thursday.
"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," she said. "In light of this analysis, the Government cannot lawfully make the cost-sharing reduction payments. …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."
These CSR payments are not bail-outs. They're reimbursements to insurance companies who are required by the law to subsidize the deductibles, co-pays, and other out-of-pocket costs for lower-income people—at 100 to 250 percent of the poverty level—purchasing "silver" level plans, the standard the ACA sets as a benchmark in each market for determining subsidy levels for those who qualify for them. They are the only level of plan that qualifies both for the tax credit and CSR subsidies.
For the coming year, a lot of insurers saw this coming and they priced premiums for the new plan year to make up for this. But a lot of insurers also just left the markets. In future years, unless Congress decides to fix this by making the appropriation explicit, many more insurers are going to leave the system. That leaves the Republican Congress in a dicey position between their unhinged president and a hopping mad insurance industry that has a lot of influence—money—on Capitol Hill.
"What it adds up to me is a gross dereliction of duty," John Baackes, CEO of L.A. Care Health plan said of the decision. "The Affordable Care Act is still the law of the land and the cost-reduction subsidies are part of that. … Even if there's a lawsuit about it, it should still be honored until the last appeal is exhausted. I thought they took oaths to uphold the law of the land. They're just flaunting it now."
Yep, they are. But speaking of lawsuits, that could be one outcome here. Insurers could sue for that money, because the law requires them to provide these subsidies. Another outcome in all this Trump is ignoring is what it's going to cost the treasury—the American taxpayer. What this action does is drive up premiums, but those premiums won't be felt by about 80 percent of the Obamacare customers, because they get income-based subsidies to make their insurance more affordable. The taxpayer is going to eat that extra cost of insurance, to the tune of about $365 billion more in premium subsidies above current costs over the next decade, according to the Congressional Budget Office. The analysts at the Kaiser Family Foundation estimate the cost to taxpayers next year alone to be $2.3 billion.
Insurers might still pull out of some markets before the new plan year because of this. While low-income enrollees will still benefit from the CSR subsidies because the insurers will still be required to provide them, there will likely be counties that lose coverage. Meaning people could start losing insurance very soon. That's another consideration for Congress, because people losing their insurance because of Trump is not going to be an easy thing for Republicans to defend in 2018.
For overnight discussion of the issue, see Brainwrap's diary.
