Trump to halt subsidies to health insurers

Posted 12:13 a.m. Friday
Updated 12:15 a.m. Friday

President Donald Trump speaks about tax reform during an event at the Harrisburg International Airport, Wednesday Oct. 11, 2017, in Middletown, Pa. (AP Photo/Alex Brandon)

— In a brash move likely to roil insurance markets, President Donald Trump will "immediately" halt payments to insurers under the Obama-era health care law he has been trying to unravel for months.

The Health and Human Services department made the announcement in a statement late Thursday night. "We will discontinue these payments immediately," said acting HHS Secretary Eric Hargan and Medicare administrator Seema Verma.

In a separate statement, the White House said the government cannot legally continue to pay the so-called cost-sharing subsidies because they lack a formal authorization by Congress.

However, the administration had been making the payments from month to month, even as Trump threated to cut them off to force Democrats to negotiate over health care. The subsidies help lower copays and deductibles for people with modest incomes.

Halting the payments would trigger a spike in premiums for next year, unless Trump reverses course or Congress authorizes the money. The next payments are due around Oct. 20.

The top two Democrats in Congress sharply denounced the Trump plan in a joint statement.

"It is a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America," said House and Senate Democratic leaders Nancy Pelosi of California and Chuck Schumer of New York. "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."

The president's action is likely to trigger a lawsuit from state attorneys general, who contend the subsidies to insurers are fully authorized by federal law, and say the president's position is reckless.

"We are prepared to sue," said California Attorney General Xavier Becerra. "We've taken the Trump Administration to court before and won."

Word of Trump's plan came on a day when the president had also signed an executive order directing government agencies to design insurance plans that would offer lower premiums outside the requirements of President Barack Obama's Affordable Care Act.

Frustrated over setbacks in Congress, Trump is wielding his executive powers to bring the "repeal and replace" debate to a head. He appears to be following through on his vow to punish Democrats and insurers after the failure of GOP health care legislation.

On Twitter, Trump has termed the payments to insurers a "bailout," but it's unclear if the president will get Democrats to negotiate by stopping payment.

Experts have warned that cutting off the money would lead to a double-digit spike in premiums, on top of increases insurers already planned for next year. That would deliver another blow to markets around the country already fragile from insurers exiting and costs rising. Insurers, hospitals, doctors' groups, state officials and the U.S. Chamber of Commerce have urged the administration to keep paying.

Leading GOP lawmakers have also called for continuing the payments to insurers, at least temporarily, so constituents maintain access to health insurance. Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander, R-Tenn., is working on such legislation with Democratic Sen. Patty Murray of Washington.

The so-called "cost-sharing" subsidies defray copays and deductibles for people with low-to-modest incomes, and can reduce a deductible of $3,500 to a few hundred dollars. Assistance is available to consumers buying individual policies; people with employer coverage are unaffected by the dispute.

Nearly 3 in 5 customers qualify for help, an estimated 6 million people or more. The annual cost to the government is currently about $7 billion.

But the subsidies have been under a legal cloud because of a dispute over whether the Obama health care law properly approved them. Adding to the confusion, other parts of the Affordable Care Act clearly direct the government to reimburse the carriers.

For example, the ACA requires insurers to help low-income consumers with their copays and deductibles.

And the law also specifies that the government shall reimburse insurers for the cost-sharing assistance that they provide.

But there's disagreement over whether the law properly provided a congressional "appropriation," similar to an instruction to pay. The Constitution says the government shall not spend money unless Congress appropriates it.

House Republicans trying to thwart the ACA sued the Obama administration in federal court in Washington, arguing that the law lacked specific language appropriating the cost-sharing subsidies.

A district court judge agreed with House Republicans, and the case has been on hold before the U.S. appeals court in Washington. Up to this point the Trump administration continued making the monthly payments, as the Obama administration had done.

While the legal issue seems arcane, the impact on consumers would be real.

The Congressional Budget Office estimated that premiums for a standard "silver" plan will increase by about 20 percent without the subsidies. Insurers can recover the cost-sharing money by raising premiums, since those are also subsidized by the ACA, and there's no legal question about their appropriation.

Consumers who receive tax credits under the ACA to pay their premiums would be shielded from those premium increases.

But millions of others buy individual health care policies without any financial assistance from the government and could face prohibitive increases. Taxpayers would end up spending more to subsidize premiums.

Earlier Thursday, Trump had directed government agencies to design a legal framework for groups of employers to band together and offer health insurance plans across state lines, a longstanding goal for the president.


Associated Press Writer Ricardo Alonso-Zaldivar contributed to this report.


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  • Howard Roark Oct 13, 6:43 a.m.
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    it can be argued that your premiums were far lower before, because insurance companies were able to deny coverage for tens of millions, due to their pre existing conditions.

    It needs fixing. It was flawed when it rolled out, and I was disgusted about how it came to be passed in the first place.

    I think you touched on another great point though. We're a pretty sick nation- with many ailments that can be prevented/reversed. However, at the end of the day, I don't feel that anyone should ever be forced into bankruptcy because they got sick.

  • Howard Roark Oct 13, 6:33 a.m.
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    "The narrower measure includes only conditions identified using eligibility guidelines from state-run high-risk pools that pre-dated the ACA. These programs were generally intended to cover individuals who would be outright rejected for coverage by private insurers. The broader measure includes additional common health conditions (for example, arthritis, asthma, high cholesterol, hypertension, and obesity) and behavioral health disorders (including alcohol and substance use disorders, depression, and Alzheimer’s) that could have resulted in denial of coverage, exclusion of the condition, or higher premiums for individuals seeking individual market coverage before the ACA protections applied."

    Some are preventable, some are not.

    I 100% agree with you that many feel screwed about what the ACA did to their premiums. I would be angry as well in your situation.

  • Henry Cooper Oct 13, 12:48 a.m.
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    His take may have been a bit extreme and you are correct about pre existing conditions but how many of those are self induced? What is the obesity rate in this country for adults and for kids.

    There are to many people upset about how this turned out for it to be the best solution. I ended up with health insurance that is more than my mortgage. How was I supposed to plan for that? Years ago when I bought there was no sniff of the ACA and health insurance was far less with better deductibles and coverage.

    The model that was planned upon did not transpire. There were not enough young people to sign up for the ACA to spread the cost as projected.

    At some point there has to be some financial fairness.

  • Howard Roark Oct 12, 9:28 p.m.
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    You're kidding right? About half of nonelderly Americans have one or more pre-existing health conditions, according to a recent brief by the U.S. Department of Health and Human Services, or HHS, that examined the prevalence of conditions that would have resulted in higher rates, condition exclusions, or coverage denials before the ACA."'s a link that cites an AARP study. go on Jerry. Tell us all about the millions of lazy Americans who don't want to work. Got it all figured out do you?

  • Jerry Sawyer Oct 12, 5:22 p.m.
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    Why did the federal government ever get involved with paying for anyone's healthcare? Why can't everyone go buy their own health insurance? Oh, I forgot, millions of people don't have or want to work. They want me to pay for their medical insurance, pay for their food, pay for their housing, and on and on. The tax payers are fools.

  • George Orlovsky Oct 12, 2:53 p.m.
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    Right now, healthy people are not flocking to any plans so this might be a moot point.