White House Will Temporarily Hand Out Subsidies to Obamacare Health Insurers

Obamacare Here Sign Joe Raedle Getty
Joe Raedle/Getty

The White House will provide subsidies for health insurers for the month of August, despite President Donald Trump’s threats that he would end the subsidies after the fallout of the failed Senate vote to repeal Obamacare.

Democrats have consistently urged President Trump to continue the Obamacare subsidies, otherwise known as the cost-sharing reduction program. The Obamacare subsidies compensate health insurers who reduce out-of-pocket expenses for low-income Americans on the Obamacare exchanges. The Congressional Budget Office (CBO) estimates that the subsidies will cost roughly $7 billion in 2017, $10 billion in 2018, and $16 by 2027.

The CBO reported that if Trump were to discontinue the subsidies, premiums for “silver” Obamacare exchange plans might rise by 20 percent. Democrats have continued to argue that the “uncertainty” over whether Trump will end the health insurance subsidies will lead to skyrocketing premium increases. Anthem recently said that they will leave the Obamacare exchange in Nevada and roughly half of the counties in Georgia, while Molina Healthcare announced that they will withdraw from the Obamacare marketplaces in Wisconsin and Utah. Both Molina Healthcare and Anthem have cited unbalanced risk pools in the Obamacare exchanges as one of the primary reasons for leaving the various Obamacare exchanges.

President Trump previously suggested that removing the Obamacare subsidies would force Democrats to work with Republicans on a solution to repeal and replace Obamacare. Trump said back in April, “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.”

Republicans argue that Congress never authorized the Obamacare insurance subsidies. This argument was the center of a 2014 lawsuit in which House Republicans sued the Obama administration on the constitutionality of the subsidies, contending they amount to a bailout. A federal district judge agreed and ordered the payments to be stopped, although President Trump has appealed and delayed the judge’s decision.

Sen. Lamar Alexander (R-TN) and ranking member Patty Murray (D-WA) will hold hearings starting in September on legislation to stabilize the individual health insurance market. The proposed legislation would likely continue funding the Obamacare insurance subsidies while giving states greater flexibility towards implementing Obamacare.

“Congress owes struggling Americans who buy their insurance in the individual market a breakthrough in the health care stalemate,” said Alexander.

House Freedom Caucus Chairman Mark Meadows will negotiate with former Tuesday Group co-chairman Tom MacArthur (R-NJ) to include more conservative reforms in a potential Obamacare stabilization package. The potential stabilization package will include funding for the Obamacare subsidies in exchange for expanded state waivers to lower premiums for Americans.

Not all conservatives remained reassured by the continuation of the Obamacare subsidies.

House Republican Study Committee Chairman Mark Walker (R-NC) said, “We cannot dig our hands into a hole $20 trillion deep to bail out insurance companies. Even worse, we will be adding insult to injury by masking the failures of Obamacare at the expense of hardworking taxpayers. The people of North Carolina are already paying enough because of Obamacare’s pitfalls. Instead of the executive branch issuing unconstitutional payments to bail out insurance companies, the Senate should continue working until they have passed a bill to repeal and replace Obamacare. Their constituents are tired of their inability to fulfill their promise.”


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