Democrats reject Trump's threats over Obamacare subsidies
President Donald Trump has not given up on making a deal on health care reform, and he indicated Wednesday that he may threaten an essential element of the Affordable Care Act (ACA) as leverage to bring Democrats to the negotiating table.
In an interview with the Wall Street Journal, Trump suggested he would withhold cost-sharing subsidies from insurers in an effort to force Democrats to bargain with him over the repeal of the ACA, also known as Obamacare.
“Obamacare is dead next month if it doesn’t get that money,” Trump said. “I haven’t made my viewpoint clear yet. I don’t want people to get hurt.... What I think should happen and will happen is the Democrats will start calling me and negotiating.”
The subsidies make deductibles and copays affordable for the low-income patients who purchase insurance on the individual marketplaces and the federal exchange created by the ACA.
Democrats immediately accused Trump of attempting to hold the health care of millions of patients hostage.
“Instead of working with Democrats to bring down costs, President Trump is cruelly threatening to raise premiums on millions of families as a pretext to do even worse damage to Americans’ health care,” House Minority Leader Nancy Pelosi said in a statement.
“President Trump looks at millions of Americans benefitting from the #ACA and sees bargaining chips, not lives,” Matt House, spokesman for Senate Minority Leader Chuck Schumer, said on Twitter.
“Trump to 20 million Americans insured under ACA: ‘Nice little health insurance you have there. Shame if something happened to it...’” Rep. Adam Schiff tweeted.
Concern about the survival of the cost-sharing reduction subsidies extends beyond the Democratic Party.
“We believe that until a more permanent, bipartisan solution is enacted to address needed changes in the Affordable Care Act, an extension of CSR subsidies in the interim through plan year 2018 would reduce uncertainty for the health insurance markets, consumers, and their families and should be secured as soon as possible,” said a Bipartisan Policy Center panel headed by former Senate Majority Leaders Bill Frist and Tom Daschle in a statement.
“The most critical action to help stabilize the individual market for 2017 and 2018 is to remove uncertainty about continued funding for cost-sharing reductions (CSRs),” a coalition including Blue Cross Blue Shield, the American Medical Association, and the U.S. Chamber of Commerce said in a joint letter to Trump Wednesday.
Joint CSR Letter to President Trump by Stephen Loiaconi on Scribd
While the subsidies are vital to insurers, it is not entirely clear that they are constitutional. The ACA does not explicitly appropriate the funds to pay for them and the Republican-led Congress has refused to authorize the White House make the payments.
Facing a lawsuit by House Republicans, the Obama administration maintained that other provisions in the law freed up funds for the subsidies. A federal judge disagreed, concluding the executive branch overstepped its constitutional authority.
For the moment, the payments are continuing while the ruling is appealed. The Trump administration has sent mixed messages about whether it plans to continue the appeal or drop it, allowing the subsidies to end.
“It wasn’t authorized by Congress,” Trump told the Wall Street Journal. “I’m going to have to make a decision.”
Experts agree that Trump has the power to cut off the funds, and that doing so would be disastrous for the individual insurance marketplace.
“If the subsidies go away, affordability is a huge problem for many Americans,” said Daniel Skinner, an assistant professor of health policy at Ohio University who has studied the politics and policy issues surrounding the ACA.
Without payments from the government to recoup their losses, insurance companies will reassess their involvement in the exchanges.
“It’s going to make a huge impact for insurers now deciding whether they will participate in 2018 coverage,” said Sandy Ahn, an associate research professor at the Center on Health Insurance Reforms at Georgetown University.
Ahn sees four possible outcomes if Trump abruptly stops the payments: insurers can absorb the resulting losses, they can request mid-year rate increases, they can exit the ACA exchanges, or they can exit the individual health insurance market completely. Many consumers would be left without any options to buy a plan on the exchanges.
“They need to know the kind of regulatory environment that they’re going to be participating under,” she said.
Even floating the possibility that the subsidies will not be paid may be enough to scare some insurers away from the markets.
“There’s one thing an insurance company hates more than anything else, and that’s unpredictability,” Skinner said.
Trump has often claimed that the best thing he could do politically would be to sit back and watch the exchanges collapse under the weight of skyrocketing premiums.
“Let it implode completely — it’s already imploding. You see the carriers are all leaving,” he said in his speech at CPAC in February. “I mean, it’s a disaster. But two years don’t do anything. The Democrats will come to us and beg for help. They’ll beg, and it’s their problem. But it’s not the right thing to do for the American people.”
The ACA imbues the head of the Department of Health and Human Services with extensive regulatory power, and that power now rests with HHS Secretary and vocal ACA critic Tom Price. The Trump administration has already taken steps to undermine the system established by the law, including scaling back advertising at the end of the enrollment period and weakening enforcement of the individual mandate to purchase insurance.
“They’re definitely driving the bus on how the ACA marketplace is going to function,” Ahn said.
Trump’s own public comments about letting Obamacare crash and burn for political gain could make pointing his finger at Democrats a hard sell. Polls suggest a majority of voters would place blame on Republicans, who now control the White House and both chambers of Congress.
According to a Kaiser Family Foundation poll released last week, three-fourths of Americans want the Trump administration to do what it can to make the ACA work, including half of Republicans. Most Democrats and independents, plus one-third of Republicans, said Trump and the GOP are on the hook for any problems with its implementation going forward.
Adding to the complexity of the political dynamic, the popularity of the ACA has seen a big boost since Republicans put forth their plan for replacing it. In a Gallup tracking poll earlier this month, support for the law was 55 percent, up from 42 percent prior to the 2016 election. That is significantly higher than Trump’s approval rating of 40 percent or approval of Congress, which is just 20 percent.
The Kaiser poll found that about two-thirds of the public felt it was a good thing that the GOP’s American Health Care Act did not pass, though nearly 60 percent of Republicans believe it sunk because it did not go far enough in repealing Obamacare.
House Republicans scrambled late last week to find a new consensus before their two-week recess. Concessions that were reportedly made to win over Freedom Caucus members would have pushed the bill too far to the right for more moderate GOP members.
Democratic strategist Craig Varoga called the Republican plan to blame the minority party for inaction on health care “both cynical and self-destructive.”
“Message to Trump: You break it, you own it, and voters are already disapproving of your agenda,” he said. “And message to Republicans in Congress, stop being obsessive-compulsive about Obamacare. It's harming the country and further worsening your already low approval ratings.”
Trump’s threat may reflect a calculation that he has a better chance of scrounging up enough votes to pass a bill from vulnerable Democrats than from the conservative Republicans in the Freedom Caucus. However, it is unclear what substantive compromises Trump could reach with Democrats, especially if he insists that repealing Obamacare is the first step.
“I think the Democrats have a pretty strong hand politically,” Skinner said.
Democrats know Trump has been unable to muster the necessary support within the GOP for a full repeal, and they understand that eliminating the subsidies for insurers would essentially destroy the system. As a result, they have little to gain from getting on board with anything resembling a repeal.
“Breaking ranks among the Democrats on the ACA I think is going to be very hard to do,” Skinner said.
The Washington Post reported Thursday that Trump’s threats have spurred Democrats to make securing the payments a top priority in negotiations to prevent a government shutdown next week.
Trump has claimed that if he does nothing, the ACA will fall apart on its own. Although there were atypically large premium increases in 2017 and several top insurers have bowed out of the marketplaces, recent analyses by the Congressional Budget Office and Standard & Poor’s have concluded that the markets are stabilizing.
However, that stability is contingent on Washington not doing anything to disrupt the markets. At this point, even taking no action could reinforce the uncertainty of insurance providers.
“There has to be some kind of affirmative statement from the Trump administration to alleviate some of the concerns and fears of insurers,” Ahn said.
In the absence of clear indications that Trump and Price will keep the status quo chugging and continue paying insurers, the probability grows that Republican predictions of disaster in the health insurance system will become a self-fulfilling prophecy.
“The longer the Trump administration takes, the more uncertainty there’s going to be,” Ahn said.