Today's Paper Latest stories Obits Weather Newsletters Traffic Puzzles/games
story.lead_photo.caption Sen. Rand Paul, R-Ky., stands with President Donald Trump after Trump signed an executive order on health care rules Thursday. Paul called Trump’s action “one of the most signifi cant free market health care reforms in a generation.” Trump gave Paul the pen he used to sign the order.

WASHINGTON -- President Donald Trump is planning to end key federal subsidies paid to insurance companies under the Affordable Care Act, his administration's most drastic move yet to overhaul the 2010 health care law.

Republicans in Congress, after several attempts, have failed to repeal and replace former President Barack Obama's signature legislative accomplishment.

The cost-sharing reduction payments help cover deductibles and other out-of-pocket costs when low-income people use their Patient Protection and Affordable Care Act insurance plans. They're paid monthly to insurers, and are estimated at $7 billion in total this year.

The legality of the payments is the subject of a legal dispute, and health insurers have pushed Congress to appropriate the funds. Congressional action would effectively end the risk of the president ending them unilaterally.

[PRESIDENT TRUMP: Timeline, appointments, executive orders + guide to actions in first 200 days]

In a statement, the White House said the Department of Justice and the Department of Health and Human Services both concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under the Affordable Care Act.

"The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system," the White House said in the statement. "Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people."

Still, any action to end the payments may face legal obstacles of its own. Seventeen states and the District of Columbia won the right in August to defend the payments in a court case. Politico earlier said the order could come as early as today.

Insurers in many states have already boosted their rates for 2018 to account for the risk that the cost-sharing payments won't be made, after months of threats from the Trump administration to cut them off. That will reduce the financial impact on insurers next year, though how they'll respond for the rest of 2017 wasn't immediately clear.

Senate Minority Leader Charles Schumer and House Democratic Leader Nancy Pelosi reacted Thursday night to the reports that Trump planned to stop the cost-sharing payments.

The Democrats said Trump "has apparently decided to punish the American people for his inability to improve our health care system." They added that "millions of hard-working American families will suffer just because President Trump wants them to."

The decision follows Trump's signing Thursday of an executive order that tells federal agencies to consider a number of steps that could erode many of the core tenets of Obama's health law.

In the order, the president asked regulators to craft rules that would allow small businesses to band together to buy insurance across state lines, let insurers sell short-term plans curtailed under the Affordable Care Act, and permit workers to use funds from tax-advantaged accounts to pay for their own coverage.

The White House and allies portrayed the president's move as wielding administrative powers to accomplish what congressional Republicans have failed to achieve: fostering more coverage choices while tearing down the law's insurance marketplaces.

While the administration characterized the order as a way to drive down rising premiums and expand coverage to more Americans, critics said it would undermine existing markets by encouraging healthier people to buy skimpier plans. That would likely lead premiums for Affordable Care Act plans, which offer more encompassing coverage regardless of a person's health history, to surge.

Other experts said Trump's proposals appear to be modest and would have limited impact.

The steps the president outlined Thursday will take months for the federal bureaucracy to finalize in regulations. Experts said consumers should not expect changes for next year.

Trump said that Thursday's move "is only the beginning." He promised "even more relief and more freedom" from Affordable Care Act rules. And although leading GOP lawmakers are eager to move on from their unsuccessful attempts this year to abolish central facets of the 2010 law, Trump said that "we are going to pressure Congress very strongly to finish the repeal and replace of Obamacare."

Democrats denounced Trump's order as more "sabotage" while Republicans called it "bold action" to help consumers. A major small-business group praised the president, while doctors, insurers, and state regulators said they have concerns and are waiting to see details.

"We want to make sure that all the consumer protections are there and included," said Michael Munger, president of the American Academy of Family Physicians.

Many of the new insurance products could be exempt from requirements of the Affordable Care Act that Republicans say have contributed to sharp increases in premiums but that supporters say have created a base line of care that has protected consumers from "junk insurance."

Administration officials said they had not yet decided which federal and state rules would apply to the new products.

Trump's order could eventually make it easier for small businesses to band together and buy insurance through new entities known as association health plans, which could be created by business and professional groups. A White House official said these health plans "could potentially allow American employers to form groups across state lines" -- a goal championed by Trump and many other Republicans.

Those "association health plans" could be shielded from some state and federal insurance requirements. Responding to concerns, the White House said participating employers could not exclude any workers from the plan, or charge more to those in poor health. Self-employed people might be able to join.

But state officials pointed out that an association health plan can set different rates for different employers, so that a company with older, sicker workers might have to pay much more than a firm with young, healthy employees.

"Two employers in an association can be charged very different rates, based on the medical claims filed by their employees," said Mike Kreidler, state insurance commissioner in Washington.

The White House plan also includes easing current restrictions on short-term policies that last less than a year -- an option for people making a life transition, from recent college graduates to early retirees.

Loosening the rules on short-term plans would create another option outside of the Affordable Care Act by allowing people to buy low-cost, temporary plans instead of more comprehensive, longer-term coverage.

Such short-term plans typically provide limited coverage that doesn't pay for maternity care, addiction treatment or other areas held to be critical benefits under Obama's law. The plans also often have annual lifetime limits and can exclude sick individuals from buying them.

Under the Affordable Care Act, these plans don't meet the individual mandate of having health insurance, so buyers are subject to a tax penalty.

Trump's action also is intended to widen employers' ability to use pretax dollars in "health reimbursement arrangements" to help workers pay for any medical expenses, not just for health policies that meet Affordable Care Act rules.

"This could be much ado about nothing, or a very big deal, depending on how the regulations get written," said Larry Levitt of the nonpartisan Kaiser Family Foundation. "The intent of the executive order is clear, to deregulate the insurance's unclear how far the administration will ultimately go."

Levitt said association health plans and short-term health insurance policies could be designed to lure healthier people away from the state insurance markets created by Obama's health law. They'd offer lower premiums to those willing to accept fewer benefits. That would drive up costs for consumers in the already-shaky Affordable Care Act markets, making them less attractive for insurers and raising subsidy expenses for the government.

But economist Douglas Holtz-Eakin, president of the center-right American Action Forum, said it looks like the impact will be on market niches, not the broad landscape of health insurance.

"This just isn't a revolution to insurance markets," he said. "It's a policy change."

In a statement earlier Thursday, Pelosi said, "The American people overwhelmingly rejected Trumpcare, but President Trump is still spitefully trying to sabotage their health care, drive up their costs and gut their coverage."

But Sen. Rand Paul, R-Ky., called Trump's action "one of the most significant free market health care reforms in a generation" that would "reduce government interference and provide more affordable health care options to everyday Americans."

Paul attended the White House ceremony and was honored by Trump with a pen used to sign the executive order. Paul was among the handful of GOP senators whose opposition scuttled the most recent effort to repeal Obama's law. Congressional Republicans have moved on from health care, and are now focusing on tax cuts.

Information for this article was contributed by Ricardo Alonso-Zaldivar of The Associated Press; by Amy Goldstein of The Washington Post; by Robert Pear and Reed Abelson of The New York Times; and by Natasha Rausch and Zachary Tracer of Bloomberg News.

A Section on 10/13/2017

Print Headline: Trump to ax key subsidies paid insurers

Sponsor Content


You must be signed in to post comments
  • RBear
    October 13, 2017 at 4:12 a.m.

    Trump is hacking away at the health insurance market, not with sound policy decisions, but with moves that will drive the industry back to pre-ACA positions and take healthcare away from millions. His lack of understanding of the insurance market will destroy the gains made by Obama and create an environment where the only people able to afford healthcare are the wealthy and young.
    I would say his base would ditch him on these moves, but then again it is the Trump demographic.

  • TimberTopper
    October 13, 2017 at 4:41 a.m.

    If this POTUS does this to the millions of Americans now covered, and those that will in the future need this coverage, he is a Nothing. Since he did not receive the most popular votes he has no mandate to do this. He is about to bring undue hardship to Americans by his greed and worthlessness. May he and his family reap all the stress, hardships, and grief he is about to put upon those needy Americans.

  • hah406
    October 13, 2017 at 7:53 a.m.

    The orange oompa loompa is throwing another temper tantrum because he and his party's congress can't get it together on a better health care law. So instead, he is going to punish those working people who need subsidies to afford insurance. Hopefully when the states file suit later this morning, the courts will snatch him back like the out of control toddler he is.

  • BirdDogsRock
    October 13, 2017 at 8:57 a.m.

    If the thing that you are insisting is "broken and horrible" really isn't so broken and horrible, then sabotage is the only recourse to prove your point.

  • Packman
    October 13, 2017 at 9:46 a.m.

    Hey RBear - Stop lying. Nobody's taking away anyone's health care. Health insurance isn't health care. How do you define "afford"? Isn't free pretty damn affordable? Millions of children and poor people in the US receive the best health care in the world and pay nothing for it. Do you intentionally fail to recognize the difference between health care and health insurance? As to that Trump demographic, I remind you of those brave Americans that risked their lives to save the lives of strangers known as the Cajun Navy and those countless country music fans in Las Vegas that did the same. The Trump demographic you so disparage is comprised of some pretty amazing and brave people. But you keep being you.

  • RBear
    October 13, 2017 at 10:22 a.m.

    Pack, there is no such thing as free. That “free” you talk about is picked up by local jurisdictions, so stop lying to make your position sound plausible. Your argument is about as specious as they come.
    Regardless how amazing and brave they are, they are still issue illiterate. There are some pretty amazing and brave folks in the progressive camp who try to stay aware of the issues and constantly have to correct the misinformation put out by the Trump demographic.
    The funny thing about this is that I never disparage their contribution ns, just their issue awareness. Progressives did the same thing in both of those situations and countless others. You just choose to ignore them to try to gloss over the real issue. Sorry, but not playing that dumb game of yours.

  • Whippersnapper
    October 13, 2017 at 11:19 a.m.

    RBear says... October 13, 2017 at 10:22 a.m.
    "Pack, there is no such thing as free."
    You got this one exactly right.
    "That “free” you talk about is picked up by local jurisdictions, so stop lying to make your position sound plausible."
    Oh, but you messed up here. Anything "free" is paid for by the taxpaying public (me and presumably you), and so it is that we the taxpayers can object to handing out funds indiscriminately.

  • RBear
    October 13, 2017 at 12:47 p.m.

    Whipper, you REALLY missed it on this one. By saying a jurisdiction picks up the tab that automatically implies the taxpayer so you are correct that I don't want funds handed out indiscriminately. But that's what happens when you follow the Pack model for health care. By law, ERs must treat those who come to them regardless whether they can pay or not. If you don't know about it, Google up EMTALA.
    Anyone with ANY brains about health care understands that ER treatment is at the top of the list when it comes to cost of treatment. If a person cannot afford health care because of lack of insurance (the front door), guess where they go when there's a problem. The ER aka the back door. Now if you did the research on EMTALA, you'll have also discovered it's an unfunded mandate. That means anyone who shows up and doesn't have insurance and can't pay gets treatment funded by ... the taxpayers at the highest rate around.
    Ask those same people you asked about ER treatment the question about preventive or non-ER care regarding cost and they'll tell you the front door is a heck of a lot cheaper than the back door. So while Pack believes we have a free solution for those who can't afford health care, what he's really saying is let's shift the cost from one part of the system to another more expensive part and let's have taxpayers pick up ALL the costs.
    Now, before someone comes at me with their Portland or other studies which showed that access to insurance did not decrease ER visits I would point them to other data which showed that the studies also pointed out there had not been enough time for behavioral change in shifting costs. In other words, if you always got care from the ER, you're probably going to keep going there until diverted which was starting to happen.
    So Pack's free is really not free as we both have agreed, but I also contend care through the front door is much better than care through the back door.

  • TimberTopper
    October 13, 2017 at 1:34 p.m.

    Packy, you and Whipper know just enough to be dangerous and wrong. In the long run the ACA would save us taxpayers a lot of money, besides helping those that could not afford health insurance premiums, to get preventative care which would also help the bottom line. But if you and your ilk wants an addition tax expenditure burden, then I guess I can pay my fair share as well. Things really work well when we have a POTUS that doesn't have a clue, and the tribe that follows him blindly knows the same.

  • 3WorldState1
    October 13, 2017 at 2:53 p.m.

    Hey, what can you say. Christians hate poor people having health insurance.
    Which is weird because when I was growing up in the church they always taught us to help, be empathetic and caring of those that had little.
    The GOP has already ruined Christianity. Or is it the other way around? Sad on both counts.