Trump Caves on Obamacare Subsidies
Faced with potentially devastating consequences for the health insurance market, President Trump reversed course on threats to end Obamacare subsidies in August.
The White House announced on Wednesday that President Donald Trump would issue Obamacare insurance subsidies for the month of August, succumbing to pressure from lawmakers of both parties who warned of a collapse of the insurance exchanges if the subsidies were cut off.
The subsidies, known as cost-sharing-reduction (CSR) payments, help offset costs for insurers and poorer Americans. For weeks, Trump threatened to end the CSR payments, a strategy that health care experts said injected uncertainty into the private insurance markets. Experts and lawmakers from both parties have warned that premiums would skyrocket and insurers would pull out of the exchanges altogether.
Still, Trump’s stated strategy on Obamacare was to let the law “implode” and force Democrats to come to the table to help fix it. Sen. Tom Carper (D-DE) warned that if Trump tries to sabotage Obamacare for his personal political gain, the success or failure of the 2010 law will rest on his shoulders.
“We have an old saying in Delaware: if you break it, you own it,” Carper told The Daily Beast last month. “And if he breaks it, he will own it. And ironically and cruelly, some of the people who will suffer the most are the people who live in those red states that voted for him, including West Virginia and Kentucky and places like that.”
After a series of setbacks and an eventual defeat in their effort to repeal and replace Obamacare, Republican senators—even those most ardently opposed to Obamacare—eventually encouraged Trump to authorize the continuation of the payments, citing the need for certainty in the markets.
Just before the Senate went on its August recess, the chairman of the powerful Health, Education, Labor and Pensions Committee Sen. Lamar Alexander (R-TN), said he encouraged the president to extend the CSR payments in order to buy Congress time to come up with a bipartisan solution to stabilize the Obamacare markets—a tacit admission from a top GOP senator that Obamacare would be the law of the land going forward. Alexander’s committee will hold hearings on market stabilization measures when Congress returns to Washington in September.
“The president’s decision helps 18 million Americans who buy health insurance on the individual market—songwriters, farmers, and the self-employed who don’t get insurance from the government or on the job,” Alexander said in a statement Wednesday, urging his colleagues to come together on bipartisan legislation that would extend the CSR payments through 2018.
Alexander wasn’t the only Republican senator encouraging Trump to continue allocating the CSR funds. He was joined by Sens. John Thune (R-S.D.), Bill Cassidy (R-LA), and Bob Corker (R-TN), who bluntly warned that Americans would suffer.
“There would be a lot of poor people that would, obviously, be negatively affected. And when you’re president, you’re president of the whole country. And while you might be dissatisfied with what you inherited, typically it’s best to try to figure out a way to move ahead in a manner that doesn’t harm folks,” Corker told The Daily Beast.
In a report issued this week, the nonpartisan Congressional Budget Office said premiums would increase by 20 percent by the year 2020, and insurance providers would continue to pull out of the exchanges.
Sen. Ted Cruz (R-TX) broke with his colleagues on the CSR payments, and was unwilling to give up hope that Obamacare could eventually be repealed.
“I think it is a mistake for Congress to bail out insurance companies instead of delivering on the promise we made to the voters to repeal Obamacare and provide real relief to the millions of Americans who are hurting under that failed law,” Cruz told The Daily Beast last month. Additionally, the Republican Study Committee, a group of conservative House members, condemned the Trump administration’s decision on Wednesday, saying it amounts to “masking the failures of Obamacare.”
Democrats have said a short-term extension of the CSR payments should precede any bipartisan market stabilization measures. Alexander is aiming to have a bipartisan deal in place by mid-September, meaning the president would have to authorize another short-term extension in order to buy Congress enough time.
Earlier this month, Bloomberg reported Trump was considering nominating moderate Sen. Joe Manchin (D-W.V.) to lead the Department of Energy, allowing West Virginia’s governor—who recently switched his party registration from Democrat to Republican—to choose Manchin’s successor. Such a move would give Republicans an extra vote to work with on a possible health care overhaul—a vote that could help them clear the 50-vote threshold.