The Trump administration announced late Thursday night that the federal government will cut off key payments to insurers in a move that will undermine the Affordable Care Act and likely cause premiums on the Obamacare exchanges to increase.
The decision to end the cost-sharing reduction (CSR) payments, which subsidize insurers that help low-income Americans with significant health care needs afford coverage, is the latest move by President Donald Trump and his administration to undermine Obamacare. It came the same day that Trump announced an executive order that will make it easier for young, healthy Americans to buy cheap plans that don’t comply with Obamacare requirements, causing premiums for less healthy Americans on the ACA exchanges to rise.
The decision to end the payments comes after the administration threatened to cut off the subsidies for months. The constant threat has caused instability in the health care marketplaces as insurers raised their rates or left areas altogether out of fear that Trump would cut off the crucial subsidies.
The Congressional Budget Office (CBO) estimated in an August report that ending the CSR payments would cause premiums for those who benefit from the payments to rise by 20 percent by 2018 and 25 percent by 2020. The CBO also found that ending the payments would add $194 billion dollars to the federal deficit by 2026.
In a statement issued after 11 p.m. Thursday night, the Department of Health and Human Services bashed Obamacare and argued that the administration cannot legally make the CSR payments without approval from Congress.
“It has been clear for many years that Obamacare is bad policy. It is also bad law,” Health and Human Services Acting Secretary Eric Hargan and Centers for Medicare and Medicaid Services Administrator Seema Verma began in a statement about the decision.
In the statement, Hargan and Verma argued that the Obama administration never received the proper authority from Congress to set aside funds for the CSR payments. House Republicans sued the Obama administration over the payments, and a federal court ruled that the payments were illegal. The federal government appealed the decision to an appeals court.
“The Obama Administration unfortunately went ahead and made CSR payments to insurance companies after requesting – but never ultimately receiving – an appropriation from Congress as required by law,” Hargan and Verma said in the statement. “After a thorough legal review by HHS, Treasury, OMB, and an opinion from the Attorney General, we believe that the last Administration overstepped the legal boundaries drawn by our Constitution. Congress has not appropriated money for CSRs, and we will discontinue these payments immediately.”
In a statement on the end to CSR payments, House Speaker Paul Ryan (R-WI) said that the Trump administration would drop the federal government’s appeal of the court ruling, but HHS did not mention the appeal in its statement.
Trump touted the administration’s decision in a tweet early Friday morning and called on Democrats to work with him to “fix” the law.
Senate Minority Leader Chuck Schumer (D-NY) and House Minority Leader Nancy Pelosi (D-CA) on Thursday night blasted the administration’s decision to end the key payments, describing the move as “sabotage.”
“Sadly, 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 leveled at working families and the middle class in every corner of America. Make no mistake about it, Trump will try to blame the Affordable Care Act, but this will fall on his back and he will pay the price for it,” they said in a joint statement.
“President Trump has apparently decided to punish the American people for his inability to improve our health care system. Trumpcare collapsed because Americans overwhelmingly recognized the cruelty and higher costs it meant for them and their loved ones. Now, millions of hard-working American families will suffer just because President Trump wants them to,” they added.
Schumer and Pelosi said that the administration has signaled it will not back bipartisan negotiations led by Sen. Lamar Alexander (R-TN) and Sen. Patty Murray (D-WA) on legislation to continue the CSR payments and give states more flexibility under Obamacare.
New York Attorney General Eric Schneiderman pledged Thursday night to sue the administration over the decision to end the payments. Schneiderman and several other attorneys general intervened in the court case over the payments over the summer, and were granted the ability to defend the payments.
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