President Donald Trump ended the months-long speculation on whether he would end Obamacare insurer subsidies that are the subject of GOP lawsuit, with an announcement Thursday he was ending them immediately, including a payment due this week.
While the question of their legality was still being hashed out in court, Trump has made clear his convoluted political reasoning behind ending them: that it would put pressure on Democrats to cooperate with his attempts to dismantle the Affordable Care Act.
But it’s still not clear how much bargaining power his blatant move to sabotage the ACA marketplaces really brings him. Democrats, after his announcement, remained stalwart that they believed Republicans now own the health care system, and all the chaos Trump causes in it. If anything, it’s Republicans who are split on how to respond to Trump’s move.
“In this, politically, he’s in much worse shape than we are,” Minority Leader Chuck Schumer (D-NY) said on a conference call with reporters Friday. “The American people, even a large number of Republicans, are on our side in terms improving the system, not destroying it. So I don’t think he has much leverage to threaten or bully.”
The subsidies are known as cost-sharing reduction payments, and they subsidize insurers for keeping out-of-pocket costs downs for low income individuals. House Republicans sued the Obama administration in 2014, claiming the payments were illegal because they hadn’t been appropriated by Congress.
Regardless of how that case would have concluded, Trump, in his comments about ending the subsidies, didn’t give the sense that Congress’ power of the purse was his primary interest.
As far back as April, Trump has threatened that ending the subsidies would be tool for him to bring Democrats to the Obamacare repeal negotiating table. He repeated the argument on Friday, while alleging that insurance companies were already rich and they didn’t support his election.
Democrats argue that if Trump was so concerned about the constitutional arguments against the payments, he would have stopped them as soon as he took office, rather than after watching congressional repeal efforts collapse multiple times.
“This is just creating uncertainty and instability in the markets and it’s going to raise premiums and I think that everyone knows that Republicans are going to own this,” a Democratic staffer of the Senate HELP committee told TPM.
A spokesman for Senate Majority Leader Mitch McConnell pushed back on that claim that Republicans now own what happens to Obamacare.
“[I]t’s amusing to me how desperate Democrats are to rid themselves of the failed law they worked so hard to force on the country. You’d think they’d be proud of it,” the spokesman, Don Stewart, told TPM via email.
The irony is that a bipartisan deal being worked on in the Senate to continue the subsidies — or even, perhaps, an affirmative statement from Trump that the payments would go on — would have had some political upsides for Republicans as they headed into the 2018 midterms. Since some insurers have already priced in a premium increase for 2018 assuming the payments would be withdrawn, continuing the subsidy payments would have set up the potential for premium rates to come back down the following year, which would have been announced before Americans headed to the polls.
Instead, there’s a solid chance that insurers who didn’t plan for termination of the subsidies will exit the marketplaces this year due to the shortfall, while Americans —particularly those whose premiums aren’t subsidized by Obamacare’s tax credits — will see their premiums spike. A Congressional Budget Office analysis on what would happen if the payments ended found that premiums would rise 20 percent next year, while 5 percent of Americans would live in areas without any ACA insurers.
A Kaiser Family Foundation poll released Friday showed that 71 percent of Americans believe that the Trump administration should try to make Obamacare work rather than make it fail to replace it later, with even more Republicans supporting the former approach over the latter.
House Speaker Paul Ryan (R-WI), who took over leading the lawsuit against subsidies once Speaker John Boehner stepped down, praised Trump’s decision in a statement Thursday night.
Other GOP House members — albeit Republicans who are retiring next year — criticized the move, as did Sen. Susan Collins (R-ME), who voted against Senate GOP repeal efforts.
“I think the President is ill advised to take this course of action, because we at the end of the day will own this,” Rep. Charlie Dent (R-PA) said on CNN Friday.
Republican governors in states that have been receptive to Obamacare also bashed Trump’s move, with Gov. Brian Sandoval (R-NV) calling it “devastating” and Gov. Charlie Baker (R-MA) labelling it the “wrong decision.”
There’s still a chance that subsidies are revived by a bipartisan fix that HELP Chairman Lamar Alexander (R-TN) and ranking member Sen. Patty Murray (D-WA) have been working on. A Democratic HELP staffer said the negotiations — which were interrupted by the most Senate repeal attempt — are ongoing. Alexander’s office did not return TPM’s inquiries.
The White House has sent mixed signals as to whether it would sign off on a compromise. Office of Management and Budget Secretary Mick Mulvaney shot down the idea that Trump would sign on to a Murray-Alexander bill unless he got other concessions, such as a border wall, while Trump himself told Alexander the week before last that he approved the senator’s approach, a GOP aide told Axios.
It’s worth noting that while Republicans were working on their repeal effort — and even after it failed —several prominent GOP lawmakers supported continuing the subsidies in some way shape or form.
“We’ve seen this story before,” another Senate Democratic staffer told TPM. “Republicans say it would be a bad idea if Trump does something. Trump does it, and then congressional Republicans tie themselves in knots to say it’s actually fine. They’re still afraid to be crosswise with the President, even if it means premiums in their state go up.”