President Donald Trump is keeping the pressure on Congress to repeal and replace Obamacare, but he has at least two options he can pursue without the legislative body that would hasten its demise.
The president is currently outraged with congressional Republicans after their months long campaign to repeal and replace Obamacare came to an end in a contentious 51-49 procedural vote in the Senate early Friday morning.
While members of Congress weigh the option of whether or not to move forward with health care reform, Trump could help to speed up the deconstruction of Obamacare through either stopping federal subsidies to the program or through weakening the requirement for all Americans to have health insurance.
1) Stopping Federal Funding For Obamacare Subsidies
Trump pledged to cut off funding for Obamacare subsidy payments Monday morning, echoing a statement he made Saturday as he continues to push Congress to repeal and replace Obamacare.
“If ObamaCare is hurting people, & it is, why shouldn’t it hurt the insurance companies & why should Congress not be paying what public pays?” Trump tweeted Monday.
The president started his threats Saturday, promising lawmakers that if they fail to pass a bill to repeal and replace Obamacare, he would quickly put an end to federal funding for Obamacare subsidies.
The Trump administration is funding these subsidy payments on a month-to-month basis.
The current system requires insurers to provide subsidy payments, commonly known as CSRs, to low and moderate income individuals that participate in the state exchanges. To make consumers put more “skin in the game,” Obamacare effectively raised deductibles to levels that are tough for many Americans to meet without financial support. CSRs were instituted to help insurers with the costs of the deductibles that patients can’t otherwise meet.
These subsidies are calculated using the cost of coverage, which is set based on the second lowest cost silver plan on the Obamacare marketplace, and an affordability variable, which is calculated on a percentage of an individual’s annual income.
Individuals making $30,000 a year would have trouble paying a roughly $6,000 deductible that is common under the current system. Federal subsidy payments ease the burden on low income consumers and allow them to participate in the state exchanges. These payments also provide insurance companies with a sense of security when offering plans on the exchanges.
As insurance providers drop out of the Obamacare state exchanges, they repeatedly note uncertainty as to whether or not the Trump administration will continue to pay out these subsidy payments as a primary reason for their exit. The federal government is slated to pay out $7 billion in CSRs in 2017 and $10 billion in 2018. (RELATED: Insurance Companies Ditching Obamacare Follow A Similar Pattern)
The problem for Trump and the Republican leadership is that if the president decides to stop funding the program for 2017, he puts insurers who are already paying out billions in CSRs in hot water, leaving them without any chance of reimbursement from the federal government.
Due to the way Obamacare is structured, if Trump chooses not to reimburse insurers for CSRs, insurers would be forced to increase plan premiums. Insurance companies will not simply eat the difference between what the enrollee pays and what they are left to cover. The excess cost would be shifted to the larger consumer base through higher premiums.
The Kaiser Family Foundation estimates that withdrawing federal funding for CSRs would cause premiums for Obamacare silver plans to increase 19 percent — a serious problem considering the overwhelming majority of Obamacare’s consumers — 85 percent — have silver plans.
Premiums in 2018 are already expected to increase by double-digit percentages, but abruptly ending funding for Obamacare subsidies is likely to cause them to skyrocket even more.
Besides the premiums, Trump could be putting his own administration and the federal government in a difficult situation. If the president stops funding CSRs, the fiscal burden of that choice would fall on the Department of the Treasury, which is already facing its own solvency crisis of sorts. Essentially, the president would be hurting his own administration, and a portion of his administration that will be key to pushing tax and regulatory reform.
The president could get sued from insurance providers for the remaining 2017 subsidy payments, and he could face an angry consumer base that will be outraged with higher premium payments with no help to cover the costs.
2) Weakening The Individual Mandate
Health and Human Services Secretary Tom Price hinted Sunday morning that the administration might broaden the options for states to waive Obamacare’s individual mandate.
Price told ABC’s “This Week” on Sunday that the individual mandate is “one of those things that actually is driving up the costs.”
Weakening the individual mandate is likely to play well with younger, healthier individuals who would rather forgo the cost of insurance coverage, but it would be met with outrage from the insurance community that has repeatedly warned against it.
America’s Health Insurance Plans President and CEO Marilyn Tavenner cautioned lawmakers against rolling back the individual mandate in a letter to Senate leadership released to The Daily Caller News Foundation Thursday. Tavenner warned that doing away with the mandate would result in fewer people with insurance coverage and would cause “a deterioration of the risk pool, which will increase premiums.”
Price said that the administration does not want Obamacare to collapse but did point out that the current system is failing.
If the administration moves forward, it would be doing away with the one thing that has kept healthier consumers in the marketplace — a much needed solvency measure for the current system. If healthy Americans are allowed to flee the Obamacare marketplace, insurers will still have to cover older consumers and those with pre-existing conditions, which is likely to result in exorbitant premium increases.
How Did We Get Here?
The Senate struck down its last-ditch bill to repeal and replace Obamacare early Friday. Senators had previously rejected two other proposals on Tuesday and Wednesday — one to repeal and replace Obamacare and another to repeal Obamacare without a replacement.
Senate Majority Whip John Cornyn told reporters Thursday evening, before the Senate even released the text of the legislation known as the “skinny repeal,” that he did not believe the bill had a chance of becoming law.
The skinny repeal was Senate leadership’s last push to repeal Obamacare, and it was expected to be simply a vehicle to get to a conference with the House. At that point, Republicans would hammer out any remaining differences and hopefully come to a consensus on a bill they could send to the president’s desk for signing.
Trump called out Senate Republicans Saturday afternoon, saying that unless they are “quitters,” the party will call for another procedural vote before moving on to a new Obamacare repeal and replace proposal.
“Unless the Republican Senators are total quitters, Repeal & Replace is not dead! Demand another vote before voting on any other bill!” the president tweeted Saturday.
The House is less in the administration’s crosshairs because the body passed a bill to largely repeal and replace Obamacare May 4. It was not an easy process; the effort faced a series of near defeats brought on by in-party bickering between moderate and conservative Republican House members.
Whether or not Trump is able to push the Senate to attempt another vote or put forth another proposal, he has the tools himself to slowly chip away at some of the main features and solvency measures of Obamacare.
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