The Trump regime has made a big decision that will keep the Obamacare insurance markets happy, at least for a bit. It will continue to pay subsidies to health insurance companies to help defray the costs of deductibles and co-pays for a majority of people on Obamacare.
The future of the payments has been in doubt because of a lawsuit filed in 2014 by House Republicans, who said the Obama administration was paying the subsidies illegally.
Without the subsidies, insurance markets could quickly unravel. Even more insurers could withdraw from the public marketplaces where more than 10 million Americans obtained coverage last year.
The Affordable Care Act requires insurers to reduce deductibles and other out-of-pocket costs for certain low-income consumers. The "cost-sharing" subsidies, which total $7 billion a year, compensate insurers for these discounts. Seven million people selecting marketplace plans for 2017 qualified for cost-sharing subsidies. They account for 58 percent of the people signing up for plans this year.
The Republican House sued saying that these funds were not specifically appropriated, so were illegal. In a rare instance in which a court was willing to intervene in a dispute between the other two branches, a conservative judge ruled with the House, but stayed the decision. The case has been pending on an appeal by the Obama administration for months and months. Trump could have decided to end the appeal, let the House prevail, and end the payments, hastening the end of Obamacare. Instead, he's dragging it out, probably because he doesn't want to take direct responsibility for the destruction of the law and so many people losing insurance so immediately.
However, and this is a big one, this isn't a move that's giving the insurers much confidence looking ahead. When the Times pushed for clarification on the regime's position on the appeal, they got this: “The precedent is that while the lawsuit is being litigated, the cost-sharing subsidies will be funded. It would be fair for you to report that there has been no policy change in the current administration." Meanwhile, the case stays in limbo, still hanging out there to threaten insurers. As expert Larry Levitt points out, they don't know whether the funding will still be there in 2018, and that matters now because they have a big deadline coming in the next month about whether or not to stay in the marketplace for next year.
And that's exactly what insurers are saying: "'Plans need more certainty,' Kristine Grow, the spokeswoman for America's Health Insurance Plans, told TPM Tuesday in an email. 'As plans make decisions for 2018, they do so with a view of wanting to serve consumers in the market for the full year. That's why it's so important to know what will happen with CSRs long term.'"