Trump Administration May Be Holding Obamacare Hostage

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Tom Price’s Department of Health and Human Services is waffling on continuing the insurer payments necessary to keep Obamacare exchanges running. Photo: Alex Wong/Getty Images

When President Trump held a press conference acknowledging the collapse of House Republican efforts to pass the administration-backed American Health Care Act last month, he seemed more preoccupied with Democratic opposition to the bill than Republican. And he issued this thinly veiled threat:

[W]hat would be really good, with no Democrat support, if the Democrats — when [Obamacare] explodes, which it will soon — if they got together with us and got a real health-care bill, I’d be totally open to it, and I think that’s going to happen.

Intended or not, that comment served as a reminder that Daddy was now in charge of the administration that would have to run Obamacare for the time being, and that it was an administration whose belief that the Affordable Care Act was an abomination might affect how it behaved toward the law. Right away, the insurance industry drew attention to the multi-billion-dollar-per-year “cost-sharing-reduction” subsidies that made it possible to cover millions of low-income people. The U.S. House had sued in 2014 to stop payment of those subsidies, on grounds that they required a specific congressional appropriation. Last year, a federal district court judge ruled in the House’s favor. But, under the Obama administration, the subsidies continued to be paid, pending an appeal of the ruling.

That grace period for continuing payments could end on May 22, when the Trump administration has to decide whether to continue or abandon the appeal. Up until this very day, the signals from the administration have been that the payments will be made until such time as a replacement plan for Obamacare is enacted. Indeed, on Monday the New York Times reported that the subsidies were in no immediate danger, quoting an assurance from the Department of Health and Human Services:

The precedent is that while the lawsuit is being litigated, the cost-sharing subsidies will be funded. It would be fair for you to report that there has been no policy change in the current administration.

But a day later, Health and Human Services yanked back that assurance:

The Trump administration vehemently pushed back on reports that it plans to pay insurers for covering co-pays and deductibles for low-income Obamacare customers.
The statement from Health and Human Services, in response to a report in the New York Times, comes as Obamacare insurers want to know whether the payments will continue into next year. Without the payments, experts and some insurers say that premiums could spike and even more insurers would flee the individual market.

Worse yet, HHS raised the specter of Trump’s old threat to hold Obamacare hostage unless Democrats helped Republicans get the votes to blow it up.

“The administration is currently deciding its position on this matter,” said HHS spokeswoman Alleigh Marré. “We have not been contacted by Democrats to help save Obamacare, perhaps because they consider Obamacare to be a losing cause.”

There’s no question this statement will throw a scare into insurers currently trying to decide whether to stay in the Obamacare exchanges. And time is rapidly running out on the only alternative for keeping subsidies flowing: an actual congressional appropriation of the money. Theoretically, it could be included in the omnibus appropriations bill that Congress will consider when it returns from its Easter recess. But that would tempt House Freedom Caucus types to fight such an appropriation as “funding Obamacare,” adding another poison pill to a bill that is already in danger of succumbing to deadlock and producing a government shutdown.

It is unclear whether the back-and-forth by HHS on the subsidies issue represents internal dissent within the administration, a reminder that no paths forward have been ruled out, or, indeed, another effort to rattle Democrats’ cages and see if some of them are willing to step out and play ball. There’s no real sign of the latter development yet. In the meantime, insurance lobbyists, newly worried that the Trump administration might try to sabotage Obamacare after all, will get jumpier than ever.

Trump Administration May Be Holding Obamacare Hostage