Trump Thinks He Just Blew Up Obamacare With a Stroke of the Pen. Did He?

If you had illusions, or hopes, that the “Kill Obamacare” reality show starring Donald Trump would settle down to a dull roar, events of the last few days should blow those illusions out of the water.

You’ve heard the news by now and I won’t repeat it here.   In addition to your favorite media outlets, see this analysis by ACA legal expert Tim Jost.

Trump has been true to his word and his warnings of the last few months—that if Congress didn’t repeal and replace the Affordable Care Act he’d resort to regulatory and executive branch action.

The words of the day (Friday, Oct. 13) are “sabotage” and “spiteful.” And I agree. But I’ll be curious to hear THCB readers’ views on these extraordinary actions by the President. Bear in mind that every independent analysis of the elimination of the CSR (cost-sharing reduction) payments and reviving long-dead association health plans indicates:

  • Both will significantly undermine the stability of the exchanges—by eroding the participation of insurers, the affordability of coverage and enrollment.
  • Association health plans will siphon off the young and health and people at low risk, undermine coverage standards, and serve consumers poorly as they have in the past. (Notably, though, the rebirth of association health plans is not imminent. Trump’s executive order requires the Labor Dept., HHS and others to issue new rules, which could take up to a year).
  • The elimination of the CSR payments will cost taxpayers a projected $194 billion in additional tax credits/premium subsidies over the next decade—because insurers will raise premiums 10% to 20% to make-up for the loss of the CSR payments. That’s according to CBO but the projection assumes, of course, that the exchanges don’t implode.

As Vox’s Sarah Kliff put it: Trump is seeking to enact a policy where the government spends billions more to insure fewer people!

The administration’s argument that it had no choice but to cancel the CSR payments for legal reasons is dubious at best. They’ll be vigorous debate on this point in the coming weeks.   And the issue is indeed complex in the context of an unprecedented lawsuit filed in 2014 by House Republicans against the Obama Administration. The suit claimed that Congress never appropriated funds for the payments. (The CSR expenditure is projected at $8 billion this year rising to $9 to $10 billion in 2018; an estimated 7 million low people benefited.)

Says Jost: “In fact, the ACA requires the federal government to reimburse insurers for these [cost-sharing] reductions. This is not a bailout. It is rather a statutory obligation of the federal government to pay insurers for services they have provided as required by law.”

Moreover, the suit was still pending after:

(a) A D.C. district court judge accepted the House Republican’s argument in the spring of 2016 but stayed her order after the Obama administration appealed, arguing forcefully (with DOJ lawyers in the lead) that there was in fact an appropriation.

(b) The Trump administration never took a position on whether there was an appropriation or not until Thursday, and had agreed to abide by the stay several times and find the payments.

(c) The D.C. Circuit Court of Appeals in August allowed 19 state attorneys general to intervene to retain the CSR payments as an essential protection for their citizens. One health lawyer, Nicholas Bagley argues that the judgment allowing the states to intervene actually technically blocks the Trump administration from unilaterally dismissing the appeal.

However, while Bagley agrees with Jost that there’s a regulation on the books that requires the CSR payments be made, he wrote in August that the Trump administration and Justice Department “could simply announce that, after a thorough review, the Justice Department has concluded that no appropriation exists to continue making the payments.”

That appears to be the avenue the Trump White House has taken.

In quick action—having anticipated Trump’s move—Democratic attorneys general from the 18 states and the District of Columbia filed a lawsuit in federal court in California late Friday. (The states are: California, Connecticut, Delaware, Kentucky, Illinois, Iowa, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington.)

The states seek to force the Trump administration to make the next round of monthly CSR payments, which are scheduled for Wed. Oct 18.

“His effort to gut these subsidies with no warning or even a plan to contain the fallout is breathtakingly reckless,” New York Attorney General Eric Schneiderman told The Huffington Post on Friday. “This is an effort simply to blow up the system.”

Notably, the new lawsuit is separate from a case pending before the D.C. appeals court in which Democratic attorneys general are defending the legality of the payments.

How the California court will react is unknown. Proving immediate harm to consumers would seem easy.  But the administration could win on the technical legal merits.   The Court could uphold Trump’s action and rule that Congress must now authorize the payments.

What about Congress?

A bipartisan effort is underway in the Senate health committee that has revolved around a deal to fund the CSR payments for two years (what the Democrats want) in exchange for giving states greater flexibility to end-run parts of the ACA and experiment with coverage options (what the Republicans want).

Trump has played a bizarre cat and mouse game over the ACA with both Republicans and Democrats in the past three months—tweet-slamming both. And while he has occasionally has said he wanted to cut a deal with Democrats on health care he has never lent explicit support to the Senate health committee efforts on the CSR payments.

But one interpretation of his action is that it’s intended to gain leverage with Democrats to…..do what?   That’s the problem. The Dems aren’t going to go along with anything resembling repeal and replace; Schumer flatly told Trump that again after an entreaty earlier this month.   But, even so, Trump tweeted on Friday morning, saying to Dems, “Call me.”

One could make a plausible—and perhaps strong—argument, however, that Trump’s actions enhance the chances Congress will act. All Dems and moderate Republicans support the CSR payments.   Maybe Trump knows that, and he plans to take credit for prodding Congress to act in the public interest even as he claims he’s still trying destroy Obamacare.

Still, the legislation being birthed in the Senate—which was stalled during the debate over Graham-Cassidy—is no slam-dunk. The right-wingers in the House see the CSR payments as “insurer bailouts.”

Schumer said late Friday that he was optimism about the chances for a deal with Republicans to continue the subsidy payments.

All of this is taking place less than three weeks before ACA open enrollment begins. Chaos already reigned, and now this. More chaos. But we all know who thrives on chaos, suspense, brinksmanship and drama. Not to mention self-interest and spite. Mr. Make-it-all-Great-Again.

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2 replies »

  1. To Trump voters who will suffer from these actions I say you deserve it. At least you’re reaping a bit from what you’ve sowed.

  2. The Machiavellian tactics for healthcare reform continues to play out. An anticipated increase cost to the Federal government over 10 years means that the Federal contribution to health spending will increase by $19 Billion annually. Assuming that our nation’s excess health spending is $1 Trillion annually and that the Federal government pays 40% of our nation’s overall health spending, the $19 Billion increase from the elimination by President would be a 3.5% increase in the Federal government’s overall healthcare obligation. Given the fundamental problems that exist for the economic support of our nation’s healthcare, the expenditure of political capital on this issue seems to be clearly wasted. Obviously, the CSR payments represent a very serious problem, but I would argue that the over-all cost and quality problems our nation’s healthcare are 1,000 times more important. A large dose of SOCIAL CAPITAL is required beginning within the beltway and then applied to every citizen’s community.
    SOCIAL CAPITAL may be defined as:
    the expression of TRUST, COOPERATION and RECIPROCITY
    by the citizens of a community that is more likely to occur for resolving the SOCIAL DILEMMAS encountered within their community’s civil life
    when the attributes of a ‘caring relationship’ increasingly characterize the networks of the community’s citizens,
    especially the neighborhood network of each citizen’s family.
    Healthcare reform needs to be driven by a process to reinvigorate our nation’s SOCIAL CAPITAL, community by community. This would be the only long-term strategy to mitigate the human adversities that drive 50% of a person’s UNSTABLE health. The real conversation for healthcare reform should use TRUST, COOPERATION and RECIPROCITY to achieve a community mediated process of fundamental healthcare reform, especially for families with young children. As a reminder, the word Machiavellian was first used in 1572. We can do better, now!