With the Senate having failed to repeal Obamacare, after a critical "Nay" vote by John McCain crushed Trump's biggest campaign promise shortly after midnight on Thursday, Trump is plans to kill Obamacare slowly, and this time he has vowed to take insurance companies and members of Congress down with it.
The president on Saturday threatened to end key payments to Obamacare insurance companies if a repeal and replace bill is not passed. "After seven years of 'talking' Repeal & Replace, the people of our great country are still being forced to live with imploding ObamaCare!" Trump tweeted, followed by: "If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!."
After seven years of "talking" Repeal & Replace, the people of our great country are still being forced to live with imploding ObamaCare!— Donald J. Trump (@realDonaldTrump) July 29, 2017
If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!— Donald J. Trump (@realDonaldTrump) July 29, 2017
This is not the first time Trump has made a similar threat: the president previously threatened to withhold Cost Sharing Reduction payments, or CSR, which lower the amount individuals have to pay for deductibles, co-payments and insurance. While the White House announced earlier this month that key ObamaCare subsidies to insurers would be paid this month, the administration did not make a commitment beyond July. Trump's threat may have a significantly adverse impact on the insurance sector when it opens on Monday.
Incidentally, Trump is not wrong when he claims that insurance companies have received implicit taxpayer-funded bailout: as the chart below shows, insurance company stocks are up 700% since Obama became president, more than double the S&P's return.
After the Friday morning Senate vote, Trump wasted no time to threaten to sabotage Obamacare. “3 Republicans and 48 Democrats let the American people down,” the president tweeted at 2:25 a.m. Friday. “As I said from the beginning, let Obamacare implode, then deal. Watch!”
As Bloomberg notes, there are two key ways the President of the U.S. could undermine the law: asking his agencies not to enforce the individual mandate created under Obamacare; and stopping funds for subsidies that help insurers offset health-care costs for low-income Americans. Both moves could further disrupt the Affordable Care Act’s individual markets and eventually lead to higher premiums, or rather even higher premiums that Obamacare itself has led to.
Where does this leave Trump’s implosion threat?
One of the first steps the president could take would be to stop the monthly CSRs. The administration last made a payment about a week ago for the previous 30 days, but hasn’t made a long-term commitment. Trump has called the subsidies a “bailout” for insurance companies in the past, and he just did it again on Saturday. “We are still considering our options,” Ninio Fetalvo, a spokesman for Trump, said in an e-mail. Meanwhile, America’s Health Insurance Plans, a lobby group for the industry, said premiums would rise by about 20 percent if the payments aren’t made. Many insurers have already dropped out of Obamacare markets in the face of mounting losses and blamed the uncertainty over the future of the cost-sharing subsidies and the individual mandate as one of the reasons behind this year’s hikes in premium.
“If certainty is not brought to the market and policymakers in Washington fail to establish stabilization measures, consumers face the prospect of significantly higher costs,” Ceci Connolly, chief executive officer of the Alliance of Community Health Plans, wrote.
Another way Trump could hamper the ACA is to instruct Price’s department to direct little or no support to open enrollment when people sign up for Obamacare plans near the end of the year. It could include ignoring website upkeep, not advertising the enrollment period and offering little help for people who have difficulty signing up.
Finally, the Trump administration could simply choose not to enforce the penalties surrounding the individual mandate of Obamacare for uninsured people or broaden exemptions to the law. The Internal Revenue Service, which enforces the penalty, said in January it would no longer reject filings if taxpayers didn’t indicate whether they had insurance. Unless the IRS follows up with each silent filing, this could let some uninsured people dodge the penalty.
As Bloomberg observes, all the moves would have an impact over time. For now, only one thing is certain: nothing is certain. As Larry Levitt, senior vice president of the Kaiser Family Foundation, puts it in a series of tweets:“The big question in health care now is what will happen with the individual insurance market,” Levitt said. “Insurers will be reading all the tea leaves for what the administration will do with cost-sharing payments and the individual mandate.”
Actually, one more thing is certain: while opinions on Trump's approach to Obamacare repeal may differ, virtually all Americans can unite behind Trump's threat to finally end bailouts of members of Congress. Whether or not he will follow up and enforce it, is a different matter entirely.