Notice & Comment

Uncertainty (Still) Has Consequences – and Trump Knows It

This post was co-authored with Rachel Sachs, a professor at Washington University School of Law. It has been cross-posted at Take Care, a blog concerned with President Trump’s constitutional duty to take care to faithfully execute the law.

Yesterday, in an interview with the Wall Street Journal, President Trump admitted that he’s toying with the idea of blowing up the ACA in order to extract concessions from Democrats. He’s now threatening to withhold payments to health insurers on the exchanges – crashing the Affordable Care Act’s individual markets and potentially kicking almost 10 million people off of their insurance, overnight.

Let’s take a step back for a moment. As we explained two weeks ago, the single most destructive thing the administration could do would be to end cost-sharing payments to insurers. The relevant question is the fate of House v. Price, a lawsuit brought by the House of Representatives against President Obama’s HHS Secretary (Sylvia Burwell) in 2014:

The House argued that the administration was acting illegally in making cost-sharing payments to insurers because Congress had not specifically appropriated those funds.  A judge on the District Court for the District of Columbia ruled both that the House had standing to sue (wrong) and that the administration’s spending violated the Appropriations Clause (right).

The Obama administration appealed the case to the DC Circuit, but, of course, on November 7, 2016, there was an intervening event: the election of President Trump.  The GOP-led House then asked the court to stay the litigation to see what the future might hold for health reform. The case is being held in abeyance, with the next status report due at the end of May, just days before insurers must file their insurance plans for 2018.

Here’s why the case is such a big deal for the individual markets:  The ACA instructs insurers to limit the out-of-pocket expenses for enrollees who make less than 250% of the federal poverty level.  This cost-sharing cap thus plays a key role in keeping insurance affordable for the low-income population.  The federal government is then supposed to reimburse insurers for cutting those low-income customers a break.

Without an appropriation, however, the federal government can’t keep making those payments. Insurers would remain bound by the statutory requirement that they reduce cost-sharing for their customers, but they wouldn’t get reimbursed.  Without those funds, most insurers will not only refuse to enter the market next year, but may exit the market immediately—cancelling plans and leaving patients uncovered.

(For more on the case, read Nick’s Vox explainer here.)

Don’t just take our word for it. Yesterday, eight large trade organizations representing physicians, hospital systems, insurers, and businesses wrote to the President to emphasize that “[t]he most critical action to help stabilize the individual market for 2017 and 2018 is to remove uncertainty about continued funding for cost sharing reductions (CSRs).” It’s a big deal to send this letter so publicly—especially when some of its signatories are organizations that have staunchly resisted the ACA (including the Chamber of Commerce).

In his interview with the Wall Street Journal, President Trump acknowledged that this arcane appropriations dispute represents an existential threat to the viability of the individual markets: “Obamacare is dead next month if it doesn’t get that money.” But instead of saying whether he would continue making the payments, he’s deliberately perpetuating uncertainty in order to force Democrats to play ball. For Trump, uncertainty is leverage—why would you surrender a negotiating advantage?

But he’s overplaying his hand. Democrats aren’t about to walk away from their most significant legislative achievement of the past fifty years just because of a fight over cost-sharing reductions. They know that Trump will be blamed if the insurance markets burn—we’ve even got polling data on that. Congressional Republicans are likely to be scrambling for a solution, not the other way around. It’s as if Trump is holding a gun to his own head and threatening to fire: maybe he’s crazy enough to do it, but Democrats won’t save him from himself.

Until yesterday, it was possible to believe that the administration’s waffling on cost-sharing reductions was the product of disorganization and Trump’s own weak grasp of policy. But now we know: it’s a deliberate tactic. Trump is holding the coverage of millions of people hostage in a Hail Mary attempt to force some yet-to-be-specified legislative compromise. Worse still, his comments will complicate congressional efforts over the coming weeks to appropriate the money for the cost-sharing reductions.

President Trump may not like the ACA, but he’ll be held responsible if it falls apart. Even before this interview, lingering uncertainty about health reform was undermining the viability of the 2018 insurance markets. Trump’s latest comments will only deepen that uncertainty.

@RESachs and @nicholas_bagley

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