Californians may be about to experience the collapse of the Obamacare exchanges in their state. Insurers in the Golden State are threatening to raise premiums and exit the Obamacare insurance exchanges if the Affordable Care Act’s cost sharing payments are not made. The payments, which are made to insurance companies by the federal government, subsidize the losses that insurers accrue from insuring people with pre-existing conditions without charging higher prices.
In April, the Trump Administration said that it planned to continue the payments, which total $7 billion per year, and also threatened to withhold the money in an attempt to pressure Democrats. The payments were absent from the compromise spending bill that the parties agreed on to avert a government shutdown.
In the past, the money for the payments was appropriated by the Obama White House because the Affordable Care Act authorized the payments, but never appropriated them. House Republicans sued President Obama to stop the payments on the grounds that only Congress has the constitutional power to appropriate funds. The House won the lawsuit, but the White House payments were allowed to continue pending appeal.
Now two California insurers say that if the government fails to make the payments, it could be disastrous for California’s health insurance markets. The Washington Free Beacon reports that Covered California, the state Obamacare exchange, says that premiums could rise by as much as 49 percent without the government subsidy to insurance companies. A private company, Molina Healthcare, threatened to exit the exchange entirely without the payments.
“If the CSR [cost-sharing-reduction payments] is not funded, we will have no choice but to send a notice of default informing the government that we are dropping our contracts for their failure to pay premiums and seek to withdraw from the Marketplace immediately,” J. Mario Molina, the CEO of Molina Healthcare wrote. “That would result in about 650,000 to 700,000 people losing insurance coverage in 2017, and we would not participate in Marketplace in 2018 resulting in over 1 million Americans losing health coverage.” The company currently insures more than a million Californians.
The prospect of insurers fleeing the market and premiums rising drastically underscores the urgent need for the passage of a health care reform package. The same market forces that affect health insurance in California operate in the other 49 states as well. If voters around the country see insurance premiums skyrocket while having fewer insurers to choose from, the backlash will most likely be against the party in power. Even though President Obama and the Democrats created Obamacare, President Trump and the Republicans were hired to fix the mess, not preside over the collapse of the health insurance industry.
President Trump and the Republicans are between a rock and a hard place on healthcare. The Republican Congress is unlikely to approve the insurance company subsidies so if President Trump wants to continue the payments he must continue the Obama Administration’s appeal against the House Republican lawsuit. As insurers and voters fret, Republican moderates and conservatives continue to dither over the details of how to reform Obamacare. Meanwhile, the clock is ticking on the ability to use a budget reconciliation to avoid a Democrat filibuster.
Health care and health insurance are issues that affect the lives of virtually every American. As Obamacare collapses and prices rise, it is vitally important that Republicans unite to solve the problem. If the party drops the ball on this cornerstone of every campaign for the past seven years, the consequences might be dire, not only for the Republican Party, but for the country as a whole.
Originally published by The Resurgent