How Can Trump Obstruct ObamaCare?
We explain how Trump can obstruct ObamaCare by “blocking insurer bailouts” (by not reimbursing insurers for cost sharing assistance.)
Update 2019: This information is historically relevant, and it could act as a useful reference in the future, but it isn’t relevant outside of times when a political entity is going after cost sharing reduction.
The Facts on Trump’s Ability to Block Cost Sharing Reduction Subsidies and What that Means
Here is what you need to know about the potential Trump obstruction:
- After the repeal and replace bill didn’t pass, Trump threatened to “block insurer bailouts” (block cost sharing assistance payments AKA CSR payments).
- Specifically, Trump said, “If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!”
- To understand how this “break ObamaCare” plan could affect America, you have to understand what cost sharing reduction payments are, how they work, and the executive, judicial, and legislative history behind them.
- Cost sharing reduction subsidies are, for the end-user, subsidies that reduce out-of-pocket costs on marketplace plans for those with incomes between 100% – 250% of the poverty level.
- The government doesn’t pay Joe-the-citizen. Instead, the insurer gives Joe a discount in advance, and then the federal government reimburses the insurer later.
- The GOP has long blocked or attempted to block readjustment payments (another subject) and reimbursement payments (like the CSR payments) via the courts and Congress. In fact, they had a strategy to do this in place before the ACA even passed (it was part of the larger strategy to block ObamaCare that resulted in 50+ repeal votes).
- The GOP can block the payments because a GOP-backed lawsuit in 2016 that was part of “the ongoing break ObamaCare strategy,” resulted in the cost sharing reduction payments being deemed illegal because Congress did not appropriate them. The process was similar to challenges that the mandate and Medicaid expansion, the employer mandate, and ACA employer birth control faced their day but lived to tell the tale. Cost sharing reduction faced its challenge as well.
- The Obama administration filed an appeal of the decision blocking CSR payments, and thus not only does Congress need to approve the payments, but the Trump administration need to not undo Obama’s appeal.
- In other words, both Trump and Congress essentially need to decide if they will fund these payments by August 21, 2017, and Trump, in his informal Tweets, is threatening not to.
- Just threatening not to fund CSR payments is going to send the market into chaos, so the tweets already made will almost raise premiums and cost sharing next year and cause insurers to flee markets. The damage is already partly done in that respect. However, CSR payments still stand.
- With the above said, if either Trump or Congress fully block the payments, then we will see an even bigger tail spin (see below). Either Trump blocks them forever, or Congress blocks them this year, either way, it is not good.
- Instead, what Trump should do is ensure the payments (although that would mean fixing ObamaCare and not breaking it, which doesn’t seem to be the plan).
- The problem is, not only will blocked payments hurt insurers, but they could also mean that cost sharing reduction assistance becomes unavailable moving forward for citizens. That means everyone getting cost sharing assistance will lose out starting in 2018.
- In the past, we have blamed many ACA cost spikes on Republican policies, and although this seems harsh and odd, this is exactly what we are talking about again. As noted above, the GOP has done this in the past with CSR payments and Medicaid expansion (either via third parties in the Courts or directly via Congress.) They have blocked other payments as well. Rubio specifically blocked readjustments for insurers who lost money covering sick people. That provision was meant to discourage insurers from price gouging, but, with those payments blocked, premium hikes began being seen and insurers fled ObamaCare markets in some states.
- As we say on our site, “the GOP is trying to break the ACA (ObamaCare) and hurt America so badly that they can pass any plan they want. They can give corporations a bunch of tax breaks and cut assistance.” This is what the court cases, Congressional action, and now Trump’s tweets are all about. We are warning you that this is their plan, and has been since 2009. President Trump is actively taking part in it.
- TIP: The Republican plan worked. The GOP took the House, Senate, and the Presidency on an anti-ObamaCare platform before much of the country realized that the ACA and ObamaCare were the same things.
- Some states have taken preliminary action and are ready to defend the payments on a state level; a court recently ruled that states could intervene in a court case to keep the payments funded.
- The above plan to save the payments on a state level doesn’t mean Trump can’t end the payments, after all, they were saved the executive (so they can die by it too). You must remember that this ensures that if Trump signs an order to undo the payments, the blame will be on his shoulders.
I know that is a lot to cover, having to explain what CSR payments are, how they work, the ongoing plan to break ObamaCare, and what Trump’s role is in this, but trust me, this was the short version.
Opinion on The Best Way to Move Forward
The charge that the GOP is trying to break ObamaCare is what I consider a fact. My last note here will be an opinion of President Trump, who recently said in a Times interview,
“…health insurance costs about $1 per month when you’re young. “Because you are basically saying from the moment the insurance, you’re 21 years old, you start working and you’re paying $12 a year for insurance, and by the time you’re 70, you get a nice plan.”
Trump is describing life insurance, not health insurance. That tells me he doesn’t understand how our health care system works or what the implications of his actions are.
Trump has very little to gain from obstructing the law under his watch. It will hurt millions of citizens (many of whom will be his supporters).
In ways, all obstructing will do at this point is to make it easier for the GOP to give Trump the boot after they get their tax cuts.
My advice to President Trump is: “don’t fall for it, Mr. President. Fix the ACA, cover everybody, and don’t let them die on the streets. Stop running the GOP’s strategy from 2009 and stop trying to pass Cruz care. No one voted for Cruz, they voted for Trump. Thank you.”
What Experts Have to Say About the Effects of Blocking CSR Payments
Consider the following excerpts from Fortune.com which will help you to understand our above points from another angle and give you insight into what experts have to say about this:
Ending the CSR subsidies, paid monthly to insurers, is one way that Trump could hasten Obamacare’s demise without legislation, by prompting more companies to raise premiums in the individual market or stop offering coverage. The administration last made a payment about a week ago for the previous 30 days but hasn’t made a long-term commitment.
Responding on Twitter, Andrew Slavitt, acting administrator of the Centers for Medicare and Medicaid Services in the Obama administration, said the impact of cutting off subsidy payments “will be felt by the middle class who will pay more to subsidize low income.”
The next payments are due Aug. 21. On Friday, health-care analyst Spencer Perlman at Veda Partners LLC said in a research note that there’s a 30 percent chance Trump will end CSR payments, which may “immediately destabilize the exchanges, perhaps fatally.”
America’s Health Insurance Plans, a lobby group for the industry, has estimated that premiums would rise by about 20 percent if the CSR payments aren’t made. Many insurers have already dropped out of Obamacare markets in the face of mounting losses and blamed the uncertainty over the future of the cost-sharing subsidies and the individual mandate as one of the reasons behind this year’s premium increases.
As you can see from the few select quotes above, Trump obstructing CSR payments is going to cost all of America for no reason other than a political one. We have less than a month to figure out what is going to happen, and every day we wait just injects more uncertainty into the market.