Trump Administration Ambivalent About Obamacare Subsidies

Capitol Building J. David AkeAP
J. David Ake/AP

The Trump administration told health insurance executives on Tuesday that the White House has yet to decide whether it will continue to provide Obamacare subsides, without which the program would fail.

Insurers met with Seema Verma, the Medicare administrator, to press the importance of these subsidies. America’s Health Insurance Plans (AHIP), released a statement saying that without the subsidies the Obamacare exchanges will falter. The group “reiterated our most pressing concern: the instability in the individual market created by the uncertainty of funding.”

Donald Trump recently threatened to withhold billions in Obamacare subsidies in order to bring Democrats into the fold on a health care reform deal. Trump said, “Obamacare is dead next month if it doesn’t get that money.” He continued, “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.”

Health insurance companies pressed the Trump administration to take a stance on the subsidies — as deadlines loom in the following weeks to set health insurance rates — and whether they will exit the Obamacare exchanges.

Conservatives argue that Obama lacked the authority to dole out billions of dollars of insurance subsidies, arguing that Congress never appropriated money for that purpose. Under former Speaker John Boehner, House Republicans sued the Obama administration to prevent it from doling out the subsidies.

In 2016 a federal judge ruled against the Obama administration but allowed the Obama White House to continue providing Obamacare subsidies while the administration appealed the decision. Republicans sought to delay the court case after Trump was elected president.

The White House said that Trump had not made a final decision about whether the administration will withhold the Obamacare subsidies from insurance companies next year. Administration sources said this week that President Trump was leaning toward ending the subsidies, but wanted to see how Democrats would react when they return to Washington.

AHIP chief executive and former Obama Centers for Medicare and Medicaid Services administrator Marilyn Tavenner argued that the heath insurance market would falter if they discontinue the subsidies. She said, “Without funding, millions of Americans who buy their own plan will be harmed. Many plans will likely drop out of the market. Premiums will go up sharply — nearly 20 percent — across the market.”

State insurance markets face increasing volatility. Humana announced in February that it will drop out of Obamacare exchanges in 2018. Aetna CEO Mark Bertolini declared that Obamacare is “in a death spiral,” and suggested they may withdraw from Obamacare exchanges entirely. Anthem announced that they might exit a large number of Obamacare exchanges next year.

Verma’s office released a statement regarding the meeting with health executives. She said that “all parties came to the table committed to maintain an active dialogue to improve care for patients and focus on long-term solutions that will fix the problems created by the Affordable Care Act.”