Remember the Pottery Barn rule: You break it, you own it.
The gutting of Obamacare continues, and it’s serious:
President Donald Trump plans to cut off subsidy payments to insurers selling Obamacare coverage in his most aggressive move yet to undermine his predecessor’s health care law.
The subsidies, which are worth an estimated $7 billion this year and are paid out in monthly installments, may stop almost immediately since Congress hasn’t appropriated funding for the program.
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 Thursday night.
Trump has spent months toying with the idea of ending these payments, which are drawn from a $7 billion fund set up specifically to cover these costs. House Republicans have challenged these payments in court, arguing that they were never appropriated in Obamacare and thus being illegally distributed.
Most of the changes will not occur until federal agencies write and adopt regulations implementing them. The process, which includes a period for public comments, could take months. That means the order will probably not affect insurance coverage next year, but could lead to major changes in 2019.
But it destabilizes the insurance market, as it adjusts for the coming effects. And that;s where trouble comes:
- It will raise Obamacare premiums by an estimated 20 percent in 2018, as health plans have to charge more to make up the lost funds. By 2020, premiums would increase 25 percent due to this change.
- Pulling the plug actually increases the national deficit. As those insurance plans make double-digit rate increases, the government will have to spend billions more on the other subsidies that 10 million Americans receive to purchase that coverage.
- The Congressional Budget Office estimates that this move will ultimately cost the government $194 billion over the next decade.
- The number of uninsured Americans would rise by one million people in 2018, in the CBO’s estimate.
- Insurance companies lose out, too, particularly those that assumed Trump would pay these subsidies and set their premiums accordingly. They now stand to face significant financial loses on the Obamacare marketplaces.
In a statement from six physician groups, including the American Academy of Family Physicians, the doctors predicted that “allowing insurers to sell narrow, low-cost health plans likely will cause significant economic harm to women and older, sicker Americans who stand to face higher-cost and fewer insurance options.”
While many health insurers remained silent about the executive order, some voiced concern that it could destabilize the market. The Trump proposal “would draw younger and healthier people away from the exchanges and drive additional plans out of the market,” warned Ceci Connolly, the chief executive of the Alliance of Community Health Plans.
As the Supreme Court discovered when it was asked to question the constitutionality of the mandate, Obamacare is like a machine. If you pull out or change one gear, the whole thing topples. This is the toppling.
So that makes 12 ways that the Trump Administration has undermined Obamacare on its own. The tally:
- Said it would end subsidies to health insurance companies that help low-income people pay out-of-pocket medical costs. Announced on Oct. 12.
- Opened the door for sales of less expensive plans with fewer benefits and fewer protections for consumers. Signed executive order on Oct. 12.
- Decided not to send health department officials to local open enrollment events in states. First reported on Sept. 27.
- Decided to shut down the Affordable Care Act website for 12 hours nearly every Sunday during open enrollment. First reported in September.
- Said it would cut by 40 percent funding to groups that help people enroll. Announced on Aug. 31.
- Said it would slash spending on advertising and promotion for enrollment to $10 million from $100 million. Announced on Aug. 31.
- Made videos criticizing the health law and posted them on YouTube. In June and July.
- Posted infographics criticizing the health law on Twitter. Mostly in late June and mid-July.
- Made tax credits for premiums less generous. Finalized in April.
- Used news releases to spread negative information about the law. As early as February.
- Weakened enforcement of the individual mandate. Reported in February.
- Removed useful guidance for consumers about the law from its website. As early as Jan. 20.
The politics of Trump’s move is interesting. By way of background, Trump may not be wrong on the merits for halting the payments. They are the subject of an ongoing battle over whether they are legal, and even some legal types who are sympathetic to the ACA think they probably aren’t. (That said, there is no chance this is what is motivating Trump. We know this, because he previously said he believed threatening to cut off the payments — and more broadly, that letting Obamacare “fail” — would give him leverage over Democrats. It doesn’t, but this still confirms what is really driving Trump)
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
The truth is that the pressure is actually on Republicans (who run Congress) to step up and make those subsidies “legal”. It would not be that hard to reach a bipartisan deal to do this, at which point the question will become whether GOP leaders and Trump will support it. If not, it is likely that Trump and Republicans will take the blame for any disruptions that ensue. Trump may not understand that, but Republicans in Congress certainly do.
— Kate Bolduan (@KateBolduan) October 13, 2017
By the way, when Trump says Obamacare is “imploding,” which will allegedly pressure Dems, he’s lying: The exchanges were stabilizing, and many of their travails are largely attributable to his own multiple efforts to sabotage them. The public understands this: Large majorities say Trump and Republicans will own the ACA’s problems going forward and want them to make the law work.