Trump Ends Subsidies to Obamacare Insurers

Confirming what a federal judge had already ruled, President Trump has ended cost-sharing reduction (CSR) payments to insurance companies participating in the Obamacare marketplaces because the payments were never authorized by the House of Representatives, where all spending must be originated and authorized.obamacare-subsidies-ended

“Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare,” the White House said in a statement. “In light of this analysis, the Government cannot lawfully make the cost-sharing reduction payments.”

Though the House never authorized CSR payments, the Obama administration — and the Trump White House until Oct. 12, 2017 — made the $7 billion-a-year payments anyway.

The Obama administration had appealed the ruling that the payments were unconstitutional, but President Trump’s action ends that appeal. However, another federal judge has ruled that 17 states and the District of Columbia could continue the lawsuit even if the Trump administration pulled out of the appeal since the end of the payments would directly affect residents.

Pro and Con

“Today’s decision by the Trump administration to end the appeal of that ruling preserves a monumental affirmation of Congress’s authority and the separation of powers,” House Speaker Paul Ryan said in a statement. “Obamacare has proven itself to be a fatally flawed law, and the House will continue to work with Trump administration to provide the American people a better system.”

House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer disagreed, issuing a statement saying, “Sadly, instead of working to lower health costs for Americans, it seems President Trump will single-handedly hike Americans’ health premiums.”

Many observers have predicted that ending CSRs will lead to a spike in insurance premiums, but the Congressional Budget Office (CBO) has instead predicted that short-term pain will lead to eventual stabilization of pricing.

The next day, the two main health insurance industry trade groups, America’s Health Insurance Plans and the Blue Cross Blue Shield Association, issued a rare joint statement calling the payments “critical” and saying “there will be real consequences” to ending them. Consumers’ insurance choices will shrink, costs will rise and the marketplaces will become unstable, they warned.

NOTE: The details in this blog are provided for informational purposes only. All answers are general in nature and do not constitute legal advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The author specifically disclaims any and all liability arising directly or indirectly from the reliance on or use of this blog.
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