Trump administration asks for time to weigh Obamacare subsidies

The Trump administration and U.S. House of Representatives Republicans on Monday told a federal court they have not yet decided on how to proceed in a major case that could end cost-sharing subsidies paid to insurers that are vital to the functioning of the Obamacare healthcare law.

Health insurers were seeking assurances from Verma that the Trump administration would continue to provide the aid, which helps millions of low-income Americans afford their deductibles and co-pays. The administration and House Republicans said they will respond separately to that request.

Conservatives argue that President Obama lacked the authority to dole out billions of dollars of insurance subsidies, arguing that Congress never appropriated money for that objective.

Some Obamacare proponents are accusing the Trump administration of trying to quietly dismantle the Obamacare markets while denying the responsibility that would come from shutting down the subsidies outright.

Because insurers have to finalize their premium requests within the 90-day window of the appeals case, they will not know for sure the fate of the subsidies. Commissioners who approve large contingency margins for 2018 due to uncertainty over cost-sharing reductions, yet did not require a similar contingency margin for 2017 premiums, can be reasonably accused of gross incompetence, playing politics with health insurance premiums, or both. The White House and House could also ask for a 90-day hold on the case. Without the so-called "cost-sharing subsidies", experts say premiums could jump by about 20 percent.

"The parties continue to discuss measures that would obviate the need for judicial determination of this appeal, including potential legislative action", the court filing said. Credit Suisse analyst Scott Fidel said that insurers such as Centene Corp and Molina Healthcare Inc that focus on the low-income families that qualify for these subsidies have the most at risk. Other times, he has said the payments will continue as long as the lawsuit continues. In its most recent 10-K annual report with the Securities and Exchange Commission, filed February 22, Anthem made not a single reference in the 520-page document to the cost-sharing reduction payments or the House lawsuit.

The Trump administration could immediately halt the payments if it dropped the appeal, and the effect of that likely would devastate the marketplaces since the insurers' contracts allow them to drop out right away in such a situation. Senators, who are in the beginning stages of writing their own repeal and replace package, have admitted that process could take months or more. About $7 billion is at stake. The letter says that "uncertainty is undermining the individual insurance market for 2018 and stands to negatively impact millions of people".

A district court judge previous year ruled in favor of the House, finding the subsidies were illegal and must stop. Meanwhile, a GOP source for a Washington Examiner story on the expected filing in the court case spun it as a sign that "the Justice Department is working with House Republicans in good faith" to keep the payments going. Last month, the White House even floated the idea of holding back these payments during talks on a government spending bill, but relented.

  • Larry Hoffman