Get ready for another big congressional fight over Obamacare.
The flashpoint this time is a key funding stream for the program ― one that subsidizes insurers so they can offer low-income consumers plans with reduced out-of-pocket expenses.
President Donald Trump suggested in a Wednesday Wall Street Journal interview that he and other Republicans might cut off the funds. Now Democrats are saying they’ll fight this by demanding that Congress include the money as part of a spending bill that is supposed to keep the government running past April.
Senate Minority Leader Chuck Schumer (D-N.Y.) “will be pushing hard for it as part of the negotiations,” a senior Democratic leadership aide told The Huffington Post.
An aide to House Minority Leader Nancy Pelosi (D-Calif.) said that the issue is her “top priority” in the negotiations.
The politics of the emerging conflict are complicated and unpredictable, and one possible outcome is an impasse that prevents the spending bill from passing. In other words, another government shutdown over Obamacare could be in the offing.
But the stakes in the fight are higher than normal, because withholding the money could throw insurance markets into disarray ― potentially unraveling insurance coverage for millions of people. In the Journal interview, Trump said he hoped that would motivate Democrats to negotiate with him over repeal.
Democrats, predictably, are having none of it. They say they are happy to talk about modifying the health care law ― but only if Republicans agree to leave the bulk of the coverage expansion in place, and only if Trump stops trying to sabotage the law.
The payments in question ― so-called cost-sharing reductions, or CSRs ― reimburse insurers for providing more generous coverage to consumers with incomes below 250 percent of the poverty line. That’s $61,500 for a family of four.
The 2010 Affordable Care Act instructs the federal government to make these payments, but it does not actually appropriate the money. The Obama administration paid the money anyway, saying it had legal authority to do so. House Republicans then launched a lawsuit over the payments.
Last year, a federal district court ruled the payments unconstitutional but also stayed the decision, assuming the Obama administration would appeal ― which it did.
As long as the decision is stayed, the federal government can continue to pay the money. But the Trump administration hasn’t indicated whether it will keep the Obama administration appeal going. That’s rattled insurers, who are busy calculating rates for next year ― and, in some cases, deciding whether to keep offering exchange coverage at all.
If the money were to vanish, insurers couldn’t simply stop offering the plans with the reduced cost-sharing. Instead, they’d be required by law to keep offering them ― and to account for the extra expense by raising premiums for everyone.
Doing so would likely mean raising premiums for the typical plan by 19 percent, according to an analysis by the Henry J. Kaiser Family Foundation. Realistically, many of the insurers ― still recovering from losses they incurred in the Affordable Care Act’s early years and uncertain about the program’s future ― would drop out altogether.
An increasingly vocal chorus of interest groups, including everybody from the American Medical Association to the U.S. Chamber of Commerce, have been calling on the president and Congress to address the issue ― ideally, with a permanent solution. One way to do that would be to appropriate the money for the next few years, or maybe indefinitely.
The coming spending bill would be an obvious place to try that, because, unlike most of the bills that go through the House these days, it will probably end up passing with a combination of Democratic and Republican votes ― over the objections of the most conservative members.
Lawmakers wouldn’t even have to find offsetting revenue or spending cuts, because the official budget baseline, from the Congressional Budget Office, anticipates the money (roughly $7 to $8 billion for next year) being spent.
Key House Republicans have already said they would like the money to keep flowing, their objections to Obamacare notwithstanding.
“I will do everything I can to make sure the cost-sharing reduction payments get made, especially this year, where they were promised by the federal government under the contracts,” Rep. Greg Walden (R-Ore.), chairman of the Energy and Commerce Committee, told Bloomberg News last month. “That’s an obligation not only to insurers but also to the people who took on those plans. We cannot leave them high and dry.”
But that was before Trump made his statements about withholding the subsidies ― and it’s not clear what House Republicans will do if Trump decides to oppose the funding strongly.
“We continue to work with the Trump administration to evaluate the options in front of us,” AshLee Strong, spokeswoman for House Speaker Paul Ryan (R-Wis.), said on Thursday.
CORRECTION: Chuck Schumer is the Senate minority leader, not the majority leader.