Trump administration mulls ending key Obamacare subsidy

President Trump has told congressional leaders that he may end a key subsidy to insurance companies that helps them offset some costs to low- and middle-income consumers who can't rely on insurance from their employers or government programs like Medicare or Medicaid.

Known as cost-sharing reduction (CSR) subsidies, they help pay for lower deductibles and out-of-pocket payments based on income levels.  If Congress were to end the subsidies, insurance companies would still have to pay them but would probably have to increase premiums to avoid losing money.

Politico:

Trump told aides in a Tuesday Oval Office meeting that he wants to end the payments to insurers because he doesn't gain anything by continuing them, according to a senior White House adviser. "Why the hell would we?" he asked about continuing the payments, according to the adviser. Trump added that if Congress wants the subsidies, lawmakers would find a way to pay for them, the adviser said.

Trump has previously expressed conflicting opinions on the issue. Insurers have been pressing for certainty as they plan for next year.

The payments, estimated at $7 billion for this year, go to insurance companies to reduce deductibles and other out-of-pocket costs for low-income consumers – an estimated 7 million people in 2017. Insurers are on the hook under the health law to keep paying even if the federal money stops.

Many senior administration officials, including Health and Human Services Secretary Tom Price, are leery of ending the payments, however, because doing so could immediately unravel the Obamacare insurance markets and strongly discourage insurers from participating next year. Insurance companies in many states would be allowed to pull out of the Obamacare markets, which in many states already have scant competition.

Several polls show that the public would blame the administration and the Republican-controlled Congress if the markets collapsed.

The issue is coming to a head: On Monday, the Trump administration has to inform the U.S. Court of Appeals for the District of Columbia how it wants to resolve a lawsuit the House Republicans brought against the Obama administration saying the White House was making the payments without congressional approval. The White House and House could also ask for a 90-day hold on the case.

If Trump wants to use the CSRs as a bargaining chip, that will get Democrats to the negotiating table, he will be sorely disappointed.  Democrats don't want to fix Obamacare.  They just want it to blow up on Trump's watch so they can blame him and the Republicans. 

The lawsuit against President Obama is based on the sound, constitutional principle that only Congress can authorize federal spending.  Indeed, CSRs were never voted on by Congress.  They were part of a regulatory regime that was imposed to implement the program.  But the Obama administration insisted that it had the power to grant the subsidies in order to "execute the law."  That catch-all phrase is what is at issue in the lawsuit.

The Trump administration and congressional Republicans will probably punt and take the 60-day extension before they have to act.  But eventually, something will have to be decided – either by the courts or by the Trump administration.

President Trump has told congressional leaders that he may end a key subsidy to insurance companies that helps them offset some costs to low- and middle-income consumers who can't rely on insurance from their employers or government programs like Medicare or Medicaid.

Known as cost-sharing reduction (CSR) subsidies, they help pay for lower deductibles and out-of-pocket payments based on income levels.  If Congress were to end the subsidies, insurance companies would still have to pay them but would probably have to increase premiums to avoid losing money.

Politico:

Trump told aides in a Tuesday Oval Office meeting that he wants to end the payments to insurers because he doesn't gain anything by continuing them, according to a senior White House adviser. "Why the hell would we?" he asked about continuing the payments, according to the adviser. Trump added that if Congress wants the subsidies, lawmakers would find a way to pay for them, the adviser said.

Trump has previously expressed conflicting opinions on the issue. Insurers have been pressing for certainty as they plan for next year.

The payments, estimated at $7 billion for this year, go to insurance companies to reduce deductibles and other out-of-pocket costs for low-income consumers – an estimated 7 million people in 2017. Insurers are on the hook under the health law to keep paying even if the federal money stops.

Many senior administration officials, including Health and Human Services Secretary Tom Price, are leery of ending the payments, however, because doing so could immediately unravel the Obamacare insurance markets and strongly discourage insurers from participating next year. Insurance companies in many states would be allowed to pull out of the Obamacare markets, which in many states already have scant competition.

Several polls show that the public would blame the administration and the Republican-controlled Congress if the markets collapsed.

The issue is coming to a head: On Monday, the Trump administration has to inform the U.S. Court of Appeals for the District of Columbia how it wants to resolve a lawsuit the House Republicans brought against the Obama administration saying the White House was making the payments without congressional approval. The White House and House could also ask for a 90-day hold on the case.

If Trump wants to use the CSRs as a bargaining chip, that will get Democrats to the negotiating table, he will be sorely disappointed.  Democrats don't want to fix Obamacare.  They just want it to blow up on Trump's watch so they can blame him and the Republicans. 

The lawsuit against President Obama is based on the sound, constitutional principle that only Congress can authorize federal spending.  Indeed, CSRs were never voted on by Congress.  They were part of a regulatory regime that was imposed to implement the program.  But the Obama administration insisted that it had the power to grant the subsidies in order to "execute the law."  That catch-all phrase is what is at issue in the lawsuit.

The Trump administration and congressional Republicans will probably punt and take the 60-day extension before they have to act.  But eventually, something will have to be decided – either by the courts or by the Trump administration.

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