March 25, 2018

Court complicates Trump's threat to cut Obamacare funds

03 August 2017, 10:30 | Christie Tate

The ruling could make it more hard for the White House to carry out recent threats by President Donald Trump to cut off the payments, giving legal standing to a new set of the payments' defenders.

The big wild card, however, remains Trump and his administration. "But Democrats know what's in his hand, and he's got a pair of twos", Nicholas Bagley, a University of MI law professor, told the Associated Press. The federal money that goes to insurers in these payments, known as cost-sharing reductions, or CSRs, offsets the money insurers lose by lowering the deductibles and co-payments they require of these policyholders. However, she stayed her decision, and the Obama administration filed an appeal, which was inherited by the Trump administration this year.

Taxpayers pick up roughly 70 percent of Congress members' insurance premiums. It's a nice perk and really no change from the cushy health-care benefits Congress and congressional staffers enjoyed before Obamacare. With no definitive answer from the Trump administration, it is expected that most payers will plan for CSR defunding.

If the new order does turn out to mean that the subsidies have gained a new legal chance to continue, that would be of increasing importance in the wake of the failed attempt last week by the Trump Administration and GOP leaders in the Senate to get "repeal and replace" health care legislation passed. President Donald Trump referred to these payments as "bailouts" in a a tweet on Saturday.

"I hope the president continues to make those payments until such time as we have the opportunity to pass something that repeals the law and replaces it with something better", said Sen.

If Trump makes good on his threat to stop paying the subsidies, he would likely precipitate Obamacare's implosion.

Industry experts say that requirement helps keep rates low by making sure young, healthy people sign up. Right now, millions of people are living month to month wondering if they will have access to affordable coverage this year or next.

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In other words, the government makes insurers offer lower-cost policies for which it then reimburses the insurers.

But while the ACA funds the subsidies under Section 1401 with a permanent appropriation, to date, Congress has not provided an annual appropriation for the cost-sharing subsidies under Section 1402.

Such a move could cause havoc and much higher premiums in insurance markets, since many low- and moderate-income Americans depend on those subsidies to help cover the cost of their policies. The case is on hold in an USA appeals court in Washington.

Given the administration's open distaste for the subsidies, several states have argued that the White House will not put up an adequate (if any) defense to the House legal challenge. Both Bagley and Jost have followed the issue of the payments closely, and disagree on whether the health law properly approved the payments to insurers.

Adler said Trump's rhetoric about stopping the payments to force legislative action may have prompted the appeals court to grant the state's request to take up the fight. The subsidies cost the federal government about $7 billion in 2017. They pick from a selection of the most generous small group plans on sale in that exchange, but only pay about 25 percent of the premium themselves. Moreover, some insurers have threatened to exit the insurance exchanges if the Trump administration doesn't guarantee that subsidies will be funded in 2018, and some have already made plans to do so.

A similar message came out of California on Tuesday, as Covered California - the department in charge of the state's Obamacare exchange - said a failure to provide CSR payments would lead to a drastic increase in premiums. To be fair, health insurance can and should serve a role in providing healthy and relatively healthy people some kind of hedge against an unexpected major or emergency medical cost.

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