The White House is telling lawmakers that it intends to continue making Obamacare payments to insurers that reduce out-of-pocket costs for low-income enrollees, but has not made a final decision about future commitments, according to a White House official.
President Trump previously suggested that he might withhold the funds as a way to bring Democrats into healthcare negotiations. Some Democrats were planning to include them as part of a government spending bill due Friday, while others said the Trump administration needed to allow for the funding to continue and disputed that Obamacare allowed for the payments without congressional appropriation.
The payments, called cost-sharing reduction subsidies, reduce out-of-pocket medical expenses for low-income customers who buy coverage on the Obamacare exchanges. Their future is uncertain because House Republicans brought a lawsuit against the Obama administration, saying they had been illegally distributed.
A federal judge sided with the House and the Obama administration appealed the ruling, but the case has been delayed amid ongoing healthcare negotiations.
Republican Study Committee Chairman Mark Walker, R-N.C., raised issues over the legality of the payments in a statement.
“The Constitution provides that, ‘No money may be drawn for the Treasury, but in consequence of Appropriations made by Law,'” he said. “Congress has made no appropriation for Obamacare cost-sharing reduction payments. Therefore, we believe making these payments without congressional approval is both clearly illegal and unconstitutional, as the district court held in House v. Price.”
Some Republicans had said they would be willing to allow the funding to continue through a spending bill. But if the funding, estimated at $7 billion, were to be stopped, insurers would look to leave the Obamacare exchanges as soon as they could, and those that remain would increase premiums, causing customers to lose coverage.
Senate Minority Leader Chuck Schumer, D-N.Y., called the move a “positive development for the negotiations.”
“It is good that once again the president seems to be backing off his threat to hold health care and government funding hostage,” he said. “These payments are essential to ensuring that millions of Americans won’t see their premiums skyrocket, and they won’t be kicked off their plan.”
House Democratic Whip Steny Hoyer of Maryland, who had called Tuesday for the Trump administration to allow for the payments, said in a statement that he was pleased with the move.
“Now, it is incumbent upon House Republicans to withdraw their lawsuit that seeks to block these payments,” he said. “Doing so will ensure immediate and long-term stability for our health insurance markets.”
It’s not clear how long Trump could continue to allow the funding to go forward, and his administration still can drop the court appeal.
Despite the optimistic tone from Democrats, the White House’s comments may not be enough to provide certainty to the insurance industry, which is filing rates for 2018 Obamacare exchange participation as early as May in some states, and will need to price premiums higher if they do not receive the funds.
“We continue to need clarity about long-term funding for CSRs,” Kristine Grow, spokeswoman for American’s Health Insurance Plans, said in an email. “Seven million Americans depend on cost-sharing reduction subsidies to make their coverage and care more affordable. If those subsidies are eliminated, premiums for 2018 and beyond will be much higher. Choices for those who buy their own insurance will diminish. Doctor and hospitals will be at greater risk as more of the care they provide goes uncompensated. Taxpayers will pay more, as tax credits for premiums go up. The American people need these CSR payments.”
