Trump ends payment subsidies to insurers
Monday, October 16, 2017
President Donald Trump signed an executive order Friday to end the federal cost-sharing reduction payments that help lower income consumers buy marketplace insurance plans under the Affordable Care Act. The administration's decision will likely force insurers to hike the cost of their policies to make up for the loss of federal money.
Very proud of my Executive Order which will allow greatly expanded access and far lower costs for HealthCare. Millions of people benefit!— Donald J. Trump (@realDonaldTrump) October 14, 2017
According to a statement from U.S. Health and Human Services Acting Secretary Eric Hargan and Centers for Medicare & Medicaid Services Administrator Seema Verma, the legal opinion of Attorney General Jeff Sessions forms the basis of the president's decision.
"The Obama Administration unfortunately went ahead and made CSR payments to insurance companies after requesting — but never ultimately receiving — an appropriation from Congress as required by law," the statement reads. "In 2014, the House of Representatives was forced to sue the previous Administration to stop this unconstitutional executive action. In 2016, a federal court ruled that the Administration had circumvented the appropriations process, and was unlawfully using unappropriated money to fund reimbursements due to insurers.
"After a thorough legal review by HHS, Treasury, OMB, and an opinion from the Attorney General, we believe that the last Administration overstepped the legal boundaries drawn by our Constitution. Congress has not appropriated money for CSRs, and we will discontinue these payments immediately."
One day after he signed an executive order to dismantle the ACA, Trump made his move to end the ACA provision of about $7 billion that helped about 6 million Americans buy healthcare insurance by reducing their co-pays, deductibles and other out-of-pocket costs. How will his latest healthcare action affect doctors, hospitals, insurers and patients?
America's Health Insurance Plans, a top trade group, warned of dire outcomes when the federal government stops CSR payments.
"Millions will face higher premiums, fewer choices and less access to the medical care they need," according to Kristine Grow, senior vice president of AHIP. To avoid such outcomes, she urged Congressional bipartisanship. "We believe we need to work together on solutions that deliver the access, care and coverage that the American people deserve."
Trump had warned Congressional Democrats of ending CSR payments as a way to force them to negotiate ACA repeal. The minority party rejected that approach. Meanwhile, a bipartisan attempt by Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) to continue the CSR payments remains alive.
The American Medical Association forecast market instability, as insurers respond to CSR removal by raising consumers' premiums, previously reduced, or depart the market altogether.
"This most recent action by the Administration creates still more uncertainty in the ACA marketplace just as the abbreviated open enrollment period is about to begin," said David O. Barbe, M.D., AMA president, in a statement, "further undermining the law and threatening access to meaningful health insurance coverage for millions of Americans. Our patients will ultimately pay the price."
In the wake of the executive order, shares of healthcare stocks tumbled, and Trump took to Twitter to boast about the decline.
Health Insurance stocks, which have gone through the roof during the ObamaCare years, plunged yesterday after I ended their Dems windfall!— Donald J. Trump (@realDonaldTrump) October 14, 2017
In California, negotiations with insurers anticipated Trump's ending CSR payments, meaning ACA consumers will be unaffected by his move, according to Anthony Wright, head of Health Access California, the statewide healthcare consumer advocacy coalition.
"California is taking extraordinary efforts to protect patients and our health system from the administrative attacks," Wright said in a statement.
It is difficult to say what happens next to the ACA, given the rapid pace of changes to former President Barack Obama's 2010 law. The ACA open enrollment period begins Nov. 1.
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