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Trump reportedly wants to kill critical Obamacare subsidies, despite warnings health insurance premiums would spike

  • If the subsidies ended, prices could increase sharply for individual health plans in 2018.
  • The White House said no decisions have been made yet whether to continue paying insurers the subsidies.
  • The aid can significantly reduce what low-income people pay out-of-pocket for health services.
A medical doctor examines a patient with a stethoscope at a CCI Health and Wellness Services health center in Gaithersburg, Maryland.
Andrew Harrer | Bloomberg | Getty Images
A medical doctor examines a patient with a stethoscope at a CCI Health and Wellness Services health center in Gaithersburg, Maryland.

President Donald Trump now reportedly wants to pull the plug on a big pot of Obamacare money — which could send insurance prices soaring for millions of Americans.

Trump told advisers Tuesday he wants to stop reimbursing health insurers for important Obamacare subsidies, which could spark political blowback for him and other Republicans as premiums rise, Politico.com reported.

A White House official told CNBC on Friday, "The White House has told Congress that it will make" payments to the insurers for May, "but has not made any commitment on further payments."

"No final decisions have been made at this time, and all options are on the table," the official said.

Insurers are obligated by the Affordable Care Act to grant the subsidies, known as cost-sharing reductions, to eligible customers.

Politico posted the story before a group including the U.S. Chamber of Commerce, America's Health Insurance Plans and the American Medical Association sent the Senate a letter urging Congress to take action to guarantee a steady stream of cost-sharing reduction funding through 2018.

"Such action would represent a strong, positive step for all consumers who buy their own insurance by eliminating the single most destabilizing factor causing double-digit premium increases for 2018," the letter said.

The subsidies reduce the out-of-pocket charges — such as co-payments, deductibles, and coinsurance — that people have to pay when they receive health treatment, prescription medication and other medical services.

The federal government, in turn, is supposed to reimburse insurers for their cost — estimated at $7 billion this year.

The Republican-controlled House of Representatives has challenged the legality of the federal reimbursements in court, claiming the Obama administration was paying insurers without congressional appropriation.

A federal judge agreed with the House but stayed her ruling as the Obama administration appealed.

On Thursday, 16 Democratic state attorneys general sought to intervene in the appeal, with the goal of keeping the funding for insurers in place. Their filings said Trump is using decisions that could affect health insurance for millions of people "as little more than political bargaining chips," according to their court filing.

On Monday, the Trump administration is scheduled to tell the U.S. Court of Appeals for the District of Columbia how, or if, it will resolve the House's lawsuit. However, as Politico noted, the administration and the House could ask Monday for the case to be put on hold for 90 days.

A staunch critic of Obamacare, Trump could order an end to the payments even as that appeal, now being handled by his administration, remains pending. But until this week it was not clear that he actually wanted to do so.

Politico reported that "many senior administration officials, including Health and Human Services Secretary Tom Price, are leery of ending the payments, however, because it could immediately unravel the Obamacare insurance markets and strongly discourage insurers from participating next year."

Health analysts say insurers would be forced to hike their premium prices for individual health plans sharply to make up for the lost federal funding, while still being required to offer reduced out-of-pocket costs for lower-income customers.

In a letter Wednesday to Trump's budget director, Mick Mulvaney, the National Association of Insurance Commissioners and The Center for Insurance Policy and Research said that "the one concern" that insurers "consistently raise as they consider whether to participate" in Obamacare markets in 2018 is uncertainty over the subsidies.

And even if they do participate, insurers have told state regulators "the uncertainty of this funding could add a 15-20% load to" premium rates "or even more."

The letter, a version of which was also sent to leaders in the Senate, urged "the Administration to continue full funding for the cost-sharing reduction payments for 2017 and make a commitment that such payments will continue, unless the law is changed."

Andy Slavitt, who oversaw Obamacare for the Obama administration, told CNBC, "The insurance commissioners know, politics aside, ordinary Americans are going to be hurt by these policies."

"The Trump Administration can only try to break the ACA and [flout] the law for so long before everyone begins to squeal," said Slavitt, who had been acting administrator for the federal Centers for Medicare and Medicaid Services.

People whose household incomes are less than 250 percent of the federal poverty level are eligible for the subsidies, which are different from the financial aid most Obamacare customers receive to lower their monthly premiums. To get the cost-sharing reductions, eligible customers must sign up for a so-called silver plan on government-run Obamacare exchanges.

Silver plans cover 70 percent of their customers' health expenses, with customers being responsible for the balance out-of-pocket, if they are not eligible for cost-sharing assistance.

On Thursday, the Los Angeles Times reported that a top Trump administration health official, Seema Verma, in April, suggested that insurers could receive the cost-sharing reduction funds from the government if insurers backed Trump's plan to repeal and replace Obamacare.

Verma, who is administrator for the Centers for Medicare and Medicaid Services, "stunned insurance industry officials by suggesting a bargain: The administration would fund the CSRs if insurers supported the House Republican bill to repeal the Affordable Care Act," the LA Times reported.

The Times quoted CMS spokeswoman Jane Norris, after being asked about that claim, as denying Verma made any such quid pro quo suggestion.

"What she said at the ... meeting in April was that no decisions had been made about CSRs," Norris said.

On Friday, Norris told CNBC in an emailed statement, "The LA Times story is completely false. The assertion that Administrator Verma offered to fund the CSR in exchange for support for legislation is preposterous."

Noam Levey, the Times reporter for that article, said, "I appreciate CMS' comments, which we were happy to include in the article when they were provided. Others that we spoke to in the course of extensively researching the article had a different sense of that meeting. We felt it was important to report that."

Watch: Trump threatens to cut Obamacare subsidies