As a follow-up to yesterday’s executive order designed to bring back junk insurance and destabilize the Affordable Care Act’s individual markets, Donald Trump late last night launched a more immediate attack on the ACA, announcing that the government would stop paying monthly subsidies designed to keep individual insurance premiums affordable. Apparently frustrated by his inability to launch a nuclear strike on North Korea, Trump decided to do it to low- and middle-income Americans instead.
Trump will immediately end $7 billion a year in cost-sharing reduction (CSR) payments to insurance companies, one of the key mechanisms in the ACA to keep consumer costs down. The CSRs reduce out-of-pocket costs like deductibles and co-pays for ACA enrollees who earn under 250 percent of the poverty level. Not surprisingly, Trump lied about what the CSRs are and what he’d done:
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In the White House statement announcing the end of the subsidies, the administration also called CSRs a “bailout of insurance companies,” which is also a lie — cost sharing reductions aren’t about throwing money at insurance companies, but about keeping premium costs affordable for lower-income consumers. But hey, it’s a useful lie for people who might be a bit uncomfortable admitting the real goal is to jack up insurance costs for millions of Americans and cause many to lose coverage altogether.
The administration cited a 2014 lawsuit by House Republicans as its excuse for ending the subsidies, arguing that since the ACA didn’t provide for a specific congressional appropriation for the CSRs, they’re unconstitutional. Never mind that the case has not been finally decided by the U.S. Court of Appeals for the D.C. Circuit; the Trump administration has decided it will simply drop the appeal and end the subsidy, because Barack Obama was a criminal:
So, what are the likely effects of Trump’s action? Probably chaos, as the Washington Post explains:
average increase of 20%. Those price hikes may be enough of a financial cushion to keep insurers in many markets for 2018. But now that CSRs have actually been discontinued, things in some markets could get very ugly, very quickly, as Topher Spiro of the Center for American Progress points out, citing the CBO:
Ending the payments is grounds for any insurer to back out of its federal contract to sell health plans for 2018. Some states’ regulators directed ACA insurers to add a surcharge in case the payments were not made, but insurers elsewhere could be left in a position in which they still must give consumers the discounts but will not be reimbursed.
Spiro added that the CBO estimated the loss of CSR payments would result in one million people losing their healthcare in 2018 alone. Guess Donald Trump really taught Barack Obama a lesson, huh?
For 2019, if Congress doesn’t act to restore and stabilize the subsidies, Trump’s action will cause insurers to jack up premiums, and many more are likely to pull out of some markets altogether. For the time being, about 80 percent of ACA — but not all — enrollees will be partly protected from higher premiums thanks to Obamacare’s premium tax credits, the law’s other cost-reduction provision. Out-of-pocket costs for deductibles and copays will go up, however. And from a fiscal standpoint, that means cutting the CSRs won’t save the government any money, since it will now be paying far more to subsidize the higher premiums.
Just how likely is it that Congress will somehow intervene and fix this? It could happen, especially as at least some percentage of Republicans realize they’ll take the blame in the midterm elections for the ACA collapsing. In the Senate, Washington Democrat Patty Murray and Tennessee Republican Lamar Alexander have renewed their efforts to at least temporarily stabilize CSR payments. The Wall Street Journal reports Trump has told at least one member of Congress that he would support such a bill if Murray and Alexander can actually get it passed, although that’s one hell of a big “if.”
States are already preparing to sue the Trump administration to protect the subsidies. New York Attorney General Eric Schneiderman released a statement promising he would fight the administration’s attempt to use families “as political pawns in his dangerous, partisan campaign to eviscerate” Obamacare:
California A.G. Xavier Becerra is also gearing up to sue, telling the Washington Post Thursday, “We’ve taken the Trump Administration to court before and won, and we’re ready to do it again if necessary.”
So. Remember when you breathed a sigh of relief when the Senate’s most recent attempt to kill Obamacare failed? It’s time to take another deep breath and get back to work. People are going to lose their health insurance if this stands. People are going to die. We can’t let that happen. And we have to make it clear to Republicans that the chaos resulting from Trump’s attempt to kill Obamacare — and the people who rely on it — is all on their heads now.
UPDATE: An excellent point (read the whole thread) from U of Chicago Law professor Daniel Hemel on the Twitters: there’s a pretty damn good case to be made that refusing to pay the cost sharing reductions is just plain illegal: