Under Pressure from Insurers, Trump Continues Obamacare Taxpayer Subsidies

Under Pressure from Insurers, Trump Continues Obamacare Taxpayer Subsidies

REUTERS/Jessica Rinaldi

The insurance industry, rattled by the chaos caused by the Republicans’ failed efforts to repeal and replace the Affordable Care Act, has been demanding some reassurance from the Trump administration of a semblance of fiscal stability in the Obamacare marketplaces or else many more large companies will bail out. 

President Trump and House Speaker Paul Ryan (R-WI) haven’t given are still trying to strike a compromise with the arch-conservative Freedom Caucus in the House and other GOP factions to enact a major overhaul of Obamacare in the coming months. 

Related: Insurer’s Message to Trump: Fix Obamacare or We’re Out 

But on Monday, the Trump administration sent a reassuring message to the health insurance industry that it would continue to support billions of dollars of Affordable Care Act cost-sharing subsidies vital to insurers and moderate to middle-income beneficiaries while a lawsuit challenging their constitutionality works its way through the courts.

Citing comments by unidentified administration officials, The Hill and Morning Consult reported on Monday afternoon that the White House and Department of Health and Human Services (HHS) would continue to make the payments while the lawsuit is being litigated.

Since he took office two months ago, the Trump administration has been exploring ways to erode Obamacare through executive orders and administrative actions to ensure the government subsidized insurance program is caught in a “death spiral” of soaring premiums, high deductibles, and limited consumer choices.

Many major insurers, including Aetna, UnitedHealthGroup, Humana and others had pulled out of many markets before the November 2016 election.

Related: Five Ways Trump Can Cripple Obamacare

Anthem and its Blue Cross-Blue Shield affiliates are seriously considering pulling back in 2018, as Jefferies analysts David Windley and David Styblo said is “likely” to happen in a note last week. If that happens, it will leave more than 800,000 individual plan customers in 14 states either without subsidized Obamacare coverage or more limited choices.

If Trump does pull the plug on the cost-sharing subsidies to cover patients’ co-payment and out of pocket costs, it would be a near fatal blow to the struggling program that has insured more than 20 million Americans since it was fully launched near four years ago.

The subsidies, totaling $7 billion this year and projected to rise to $10 billion next year, are considered essential by consumers and insurance companies to keep insurance costs relatively affordable.

House Republicans claimed in a lawsuit that the subsidies were unconstitutional because Congress didn’t specifically appropriate the money, and a federal judge ruled in their favor in May 2016. The Obama administration appealed the ruling, but the new Trump administration has been silent until now whether it will continue to challenge the court ruling.

Related: It Looks Like Americans Are Blaming Paul Ryan for the Health Care Debacle

Ryan optimistically told reporters last week that Trump could keep the subsidies alive while the case works its way through the courts. “While the lawsuit is being litigated, then the administration funds these benefits,” Ryan said, “That’s how they’ve been doing it, and I don’t see any change in that.”

But Ryan’s assurances alone weren’t good enough for many insurance executives, and executives told Axios that they wanted a pledge from Trump that the subsidies will continue before they commit to another season with Obamacare. During testimony last week on Capitol Hill, HHS Secretary Tom Price wouldn’t say whether the administration would continue making the payments, citing the ongoing litigation.

Now, apparently, the issue has been resolved, and Anthem and others may reconsider their tentative decisions to pull out from many markets.