Trump to end ACA subsidies, signs order to expand insurance plans outside of Obamacare

President Trump moved Thursday to scale back rules on health insurance across the country in the administration’s most ambitious effort to date to use its regulatory powers to undermine the Affordable Care Act.

President Donald Trump plans to halt payments to insurers under the Obama-era health care law that he has been trying to unravel for months.

That's according to two people familiar with the decision who sought anonymity because they were not authorized to speak publicly.


The White House said in a statement that the Department of Health and Human Services has determined there is no appropriation for cost-sharing reduction payments to insurers under the Obamacare law.

Trump's decision is expected to rattle already-unsteady insurance marketplaces. The president has previously threatened to end the payments, which help reduce health insurance copays and deductibles for people with modest incomes, but remain under a legal cloud.


The president's action is likely to trigger a lawsuit from state attorneys general, who contend the subsidies to insurers are fully authorized by federal law, and the president's position is reckless.

Senate Minority Leader Chuck Schumer and House Democratic Leader Nancy Pelosi said Trump "has apparently decided to punish the American people for his inability to improve our health care system." They add that "millions of hard-working American families will suffer just because President Trump wants them to."

Earlier Thursday the president signed an executive order to let more Americans buy coverage outside of the marketplaces set up under the law.

The order aims to make it easier for insurers to sell relatively inexpensive health plans that would likely offer skimpier coverage than is required under Obamacare. But critics said the order could also cannibalize Obamacare and drive up premiums for its sickest beneficiaries.

Any tangible change to health insurance markets caused by the order is likely years off — and the impact in Maryland might be limited. State law has for years prohibited the kind of health coverage at the center of Trump's order.

Speaking at the White House, Trump described the latest effort to chip away at Obamacare as "only the beginning," and predicted Congress would eventually try again to change the system through legislation. Republicans in Congress have failed repeatedly in their long-held goal of rolling back the 2010 health care law, President Barack Obama's signature domestic policy achievement.

"With these actions, we are moving toward lower costs and more options in the health care market and taking crucial steps towards saving the American people from the nightmare of Obamacare," the president said.

"In the coming months," he said, "we plan to take new measures to provide our people with even more relief and more freedom."

Maryland Health Exchange has opened its website for browsing insurance plans.

While loosening consumer protections in the ACA might make insurance cheaper for those in good health, critics warned, it would happen at the expense of millions of sicker Americans. Cheaper, less comprehensive insurance products would incentivize healthier consumers to abandon the risk pools that pay claims for costlier patients.

"This new order would sabotage the ACA health insurance markets and drive up health care costs for people who need health care the most," said Maryland Citizens' Health Initiative President Vincent DeMarco, a longtime supporter of Obamacare.

About 243,000 Marylanders enrolled in insurance plans through the Obamacare exchange in 2017, dramatically decreasing the state's share of uninsured. But premiums for people buying private plans through the exchange have shot up, and insurers have pulled out of the market.

The vast majority of Obamacare enrollees who receive federal subsidies to help pay for coverage have not had to shell out for those premium increases. But enrollees who do not receive subsidies have had to pay.


The ACA imposed new requirements on insurers, prohibiting them from turning away sick consumers or placing annual or lifetime limits on medical coverage and mandating a basic set of benefits. Those include coverage of prescription drugs, maternity care and mental health treatment.

Trump's order instructs federal departments to make it easier for individual Americans or small businesses to join together to purchase health insurance through so-called association health plans. Bakeries across the country, for instance, could group employees into an insurance pool separate from Obamacare.

That arrangement, supporters say, would offer several benefits, including waivers from Obamacare regulations that require insurers to cover specific claims. If association health plans are not required to offer as many benefits, they would likely cost less.

Maryland banned association plans in the 1990s because the state was concerned about the kind of market shifts some advocates warn would result from Trump's order. Creating a separate insurance pool that caters to healthy, low-cost patients could drive up premiums in traditional pools that also serve the sick.

Trump also called for the expanded use of short-term plans, which don't have to meet insurance protections in the ACA. The Obama administration issued rules that prohibited consumers from buying those plans for more than three months.

The president's moves, which come after congressional Republicans failed to repeal the health care law this year, also renewed fears that Trump is determined to deliberately destabilize insurance markets.

Democrats say the requirements that Obamacare imposed on insurers are needed to avoid surprises that were common before the ACA, such as patients realizing too late that their insurance did not cover an illness, or that they had hit an annual cap.

Republicans counter that the requirements drive up costs, and that consumers can make informed choices without government intervention.

"As Congress continues to consider the repeal and replacement of Obamacare, this executive order's commonsense approach will make significant strides in the effort to end the nightmare of rising premiums and decreasing choice in the Obamacare exchanges," Rep. Andy Harris, a Baltimore County Republican, said in a statement.

Democrats disagree.

"The order the president signed today will result in subpar health care for some and higher costs for others," said Rep. Steny Hoyer of Southern Maryland, the No. 2 Democrat in the House. "We should instead be pursuing bipartisan efforts to address the health care challenges we face as a nation."

Trump gave the Departments of Treasury, Labor, and Health and Human Services at least two months to come up with a detailed plan that would then be submitted to the government's lengthy regulatory review process. How effective the new plans will be at lowering costs for some — and how much of a threat they pose to the marketplaces — will depend on how aggressively the agencies act in writing those new rules.

Trump's reliance on executive orders in place of legislation represents a departure from his campaign rhetoric last year, when the Republican and his supporters repeatedly criticized Obama for taking unilateral executive action.

"You're supposed to get together and pass a law," Trump told CNN in early 2016. "[Obama] doesn't want to do that because it's too much work. So he doesn't want to work too hard."


At the time, Obama faced a Congress controlled by the opposite party. Trump has GOP majorities in both the House and Senate. But disagreements within Republican ranks has made advancing major legislation difficult. The president had to negotiate with Democrats last month to approve a must-pass government funding bill and debt ceiling increase.

"We're going to also pressure Congress very strongly to finish the repeal and the replace of Obamacare once and for all," Trump said. "We will have great healthcare in our country."

Associated Press reporters Ken Thomas and Catherine Lucey contributed to this report.

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