Earlier in the week, The Wall Street Journal reported that the Trump Administration was going to make some big changes to the American healthcare system.
The administration made an announcement late Thursday that one of those changes would be that key payments to insurers selling on the Obamacare healthcare exchanges would officially end.
The cost-sharing reduction payments cost an estimated $7 billion and Trump has alluded to halting the payment program a few times before.
“Based on guidance from the Department of Justice, 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,” write the White House in a statement on Thursday night. “Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people.”
Obamacare, also known as the Affordable Care Act, relied heavily on these payments to keep insurers enrolled in health care exchanges.
The payment system, in particular, was a point of contention between Democrats and Republicans. Republicans argued that tax-payer dollars shouldn’t be used to “bail-out” insurance companies and halted the subsidies with legal action. The Obama Administration was attempting to appeal the subsidies in court. But Trump’s move takes the appeal off the table.
“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. Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people,” said Sarah Huckabee Sanders, White House press secretary.
Trump is visually frustrated with the lack of progress when it comes to health care law and made the overnight decision in an effort to pressure the Democrats to compromise.
“The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!” tweeted Trump Friday morning. “ObamaCare is a broken mess. Piece by piece we will now begin the process of giving America the great HealthCare it deserves!”
On Thursday, Trump also signed an executive order to make health care premiums lower and predicts that “millions and millions of people” will benefit.
“With these actions,” said Trump at White House ceremony when signing the executive order. “We are moving toward lower costs and more options in the healthcare market, and taking crucial steps toward saving the American people from the nightmare of Obamacare.”
“Mr. Trump’s order would also eventually make it easier for small businesses to band together and buy insurance through 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 Mr. Trump and many other Republicans — allowing more options and the formation of larger risk pools,” writes the New York Times.
The federal agencies will need time to write and adopt the new regulations. The order won’t likely go into effect until sometime next year.
Democrats are already expressing their disapproval of Trump’s recent move to stop the cost-sharing reduction payments.
“If these reports are true,” said Senate Minority Leader Chuck Schumer, D-N.Y., and House Minority Leader Nancy Pelosi, D-Calif in a joint statement. “The president is walking away from the good-faith, bipartisan Alexander-Murray negotiations and risking the health care of millions of Americans.”
“It is a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America. 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,” said Schumer and Pelosi in the statement.
Democrats are expected to take legal action in response.
On the other hand, Speaker Paul Ryan applauded Trump’s move to stop the appeal of the subsidies.
“Today’s decision … preserves a monumental affirmation of Congress’s authority and the separation of powers,” said Ryan. “Obamacare has proven itself to be a fatally flawed law, and the House will continue to work with the Trump administration to provide the American people a better system.”
Author’s note: Trump had to take matters into his own hands. This action will force lawmakers to come up with a solution sooner than later.