Donald Trump has been accused of a “spiteful act of vast, pointless sabotage” by cutting off subsidies to health insurance companies for low-income patients.
The move - one of two made yesterday in an effort to fatally undermine Obamacare - has sparked threats of legal action and concerns of chaos in insurance markets.
His decision is likely to please those among his political base who detest the Obamacare system, which many Republicans have attacked for years as an unneeded government intrusion in Americans’ healthcare.
But the move will likely have severe consequences - a study by the widely-respected Kaiser Family Foundation found such an act would force insurance companies to either raise premiums to cover the shortfall or exit the market altogether.
This would mean that on top of the lower-income patients, those on middle-incomes may not be able to afford healthcare either.
The same study also found the measure won’t even save the Government money in the long-term, saying:
...the increased cost to the federal government of higher premium tax credits would actually be 23% more than the savings from eliminating cost-sharing reduction payments. For fiscal year 2018, that would result in a net increase in federal costs of $2.3 billion [£1.7 billion]. Extrapolating to the 10-year budget window (2018-2027) using CBO’s projection of CSR payments, the federal government would end up spending $31 billion [£23.3 billion] more if the payments end.
Trump yesterday also signed an Executive Order to make it easier for Americans to buy bare-bones health insurance plans exempt from Obamacare requirements - although he nearly let without actually signing it.
Bloomberg News’ Margaret Talev, said: “If you’re young, healthy or if your insurance under the Affordable Care Act is so expensive that you just feel you can’t afford it, this may give you some other options.
“But don’t look for those options to include the same protections, so if you have mental health [issues] or pre-existing conditions, if you need maternity coverage, they may not be covered under the new rules that are envisioned.”
The decisions are the most dramatic actions Trump has taken yet to weaken the Affordable Care Act, President Barack Obama’s signature healthcare law, which extended insurance to 20 million Americans.
The move drew swift condemnation from Democrats and threats from state attorneys general in New York and California to file lawsuits.
Senate Democratic Leader Chuck Schumer and House Democratic Leader Nancy Pelosi derided the subsidies cut-off in a joint statement, saying Trump would single-handedly push Americans’ healthcare premiums higher.
“It is a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America,” they said. “Make no mistake about it, Trump will try to blame the Affordable Care Act, but this will fall on his back and he will pay the price for it.”
The White House said late on Thursday that it could not lawfully pay the subsidies anymore.
A White House statement said that based on guidance from the Justice Department, “the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare.”
“In light of this analysis, the Government cannot lawfully make the cost-sharing reduction payments,” it said.
New York Attorney General Eric T. Schneiderman said in a statement he was prepared to lead other attorneys general in a lawsuit.
“I will not allow President Trump to once again use New York families as political pawns in his dangerous, partisan campaign to eviscerate the Affordable Care Act at any cost,” he wrote.
The payments are the subject of a lawsuit brought by House Republicans against the Obama administration that alleged they were unlawful because they needed to be appropriated by Congress. A judge for the federal district court for the District of Columbia ruled in favor of the Republicans, and the Obama administration appealed the ruling.
The Trump administration took over the lawsuit and had delayed deciding whether to continue the Obama administration’s appeal or terminate the subsidies, but in April Trump began threatening to stop the payments. That case became more complicated in August when a U.S. appeals court allowed 16 Democratic state attorneys general to defend the payments and have a say in the legal fight.
The political turbulence has affected insurers’ decisions, reports Reuters.
Anthem Inc, one of the largest remaining Obamacare insurers, in August scaled back its offerings in Nevada and Georgia and blamed the moves in part on uncertainty over the payments.
Blue Cross and Blue Shield of North Carolina earlier this year raised premiums by more than 20 percent, but said it would have only raised premiums by about 9 percent if Trump agreed to fund the payments.
The nonpartisan Congressional Budget Office estimated that cutting off the insurer payments would cause premiums to rise 20 percent in 2018, and said that 5 percent of Americans would live in areas that do not have an insurer in the individual market in 2018.
Trump has taken a number of other steps to undermine Obamacare. Last week, the Department of Health and Human Services issued rules that let businesses or non-profit organizations lodge religious or moral objections to obtain an exemption from Obamacare’s mandate that employers provide birth control in health insurance with no co-payment.
The administration also slashed the Obamacare advertising and outreach budget and halved the open enrollment period.