Trump Administration to Continue Obamacare Subsidies to Insurers

The Trump Administration has announced that it will continue to pay subsidies to insurance companies under the Affordable Care Act says the New York Times. Separate from the subsidies paid to individuals, the subsidies to insurance companies are intended to offset losses that they incur under the Affordable Care Act and total $7 billion per year.

Without the subsidies, more insurance companies would exit the Obamacare marketplaces. Already one-third of counties have only one Obamacare insurer according to the Kaiser Foundation. Kaiser also estimated that without the subsidies, average premiums for the Obamacare silver plan would rise by 19 percent.

The failure of their health care reform bill has left the Republicans between a rock and a hard place. On one hand, disagreement between rival Republican factions makes repealing large parts of Obamacare and reforming the remainder impossible. On the other hand, if the GOP does nothing and Obamacare implodes with prices spiraling out of control, President Trump and Republican leadership would likely bear the brunt of the public displeasure.

The Trump Administration seems to have decided that the least bad option is keep the Affordable Care Act on life support for the time being. Continuing the subsidies will not be popular with the Republican base, but it might buy the president and congressional leaders time to iron out differences between the Freedom Caucus and moderates for a second attempt at reform.

Ironically, the subsidies were the subject of a lawsuit filed by House Republicans against the Obama Administration. The GOP won the case on the grounds that Congress had authorized the subsidies, but had never appropriated funds for them.

“Congress is the only source for such an appropriation, and no public money can be spent without one,” wrote US District Judge Rosemary Collyer in her decision. Ultimately the ruling against the president was stayed pending appeal, allowing the unappropriated subsidies to continue.

At least two Republican leaders say that Congress should appropriate the money. “I don’t think anybody wants to disrupt the markets more than they already are,” Rep. Tom Cole, chairman of the Appropriations subcommittee responsible for health spending told the Times. “It’s a very unstable market.”

“I will do everything I can to make sure that the cost-sharing reduction payments get made,” Rep. Greg Walden (R-Oreg.), chairman of the Energy and Commerce Committee said. Walden said the subsidies are “an obligation we have not only to the insurers,” but also to consumers, and “we cannot leave them high and dry.”

A bill appropriating money for the subsidies might make unlikely bedfellows. Moderate Republicans and those who don’t want to see upheaval in the health insurance industry might find themselves voting with Democrats to preserve the Obamacare subsidy… if only for a little while.

If the appeal continues, the Trump Administration can make the payments without an appropriation from Congress for the time being. This puts the Trump Administration in the awkward position of defending an Obama-era end run around Congress in federal court against House Republicans.

The critical nature of the subsidies on making Obamacare’s health care marketplaces work illustrates a fundamental flaw in the Affordable Care Act. The ACA did nothing to reduce the cost of health care or health insurance, it merely changed who pays. Obamacare shifted the burden of paying the bills from consumers and health insurance companies to the taxpayers. Without government subsidies paid for by taxpayers, the whole house of cards will fall.

Originally published on The Resurgent

Millions of poorest Americans get no Obamacare subsidies

Lost among reports of the difficulties of the Affordable Care Act’s health insurance exchanges is the news that President Obama’s health insurance reform law is actually making it harder for the very poor to get insurance coverage. The architecture of the law and the Supreme Court’s 2012 decision that struck down a portion of the Affordable Care Act have combined to create a gap for low income Americans that deprives them of Obamacare’s health insurance subsidies as well as no-cost coverage under Medicaid.

Danielle Morgan, the 23-year-old married mother of four in North Carolina, is one of those affected. Danielle’s husband is a full-time Bible college student with no income. Danielle told Examiner that she works to support their family, but her employer does not offer health insurance. The family has not had health insurance in the past, but Danielle was hopeful that the new health insurance marketplaces would allow her to purchase an affordable policy for her family and avoid Obamacare’s fine.

Even though Danielle is employed, President Obama unilaterally delayed the portion of Obamacare that requires employers to provide their employees with health insurance. The employer mandate will only apply to companies with more than 50 employees when it goes into effect in 2015.

The problem of insuring low income workers is made worse because Obamacare bans the “mini-med” policies that cover an estimated 1.4 million Americans according to an estimate by Politico. These plans were used by many employers, such as McDonald’s, to provide low-cost health coverage for low-income workers who cannot afford to pay their share of a traditional health insurance plan. Because the plans have annual limits for payouts and do not provide the federal minimum essential coverage, they do not qualify as health insurance under the Affordable Care Act. Many workers formerly insured by “mini-med” plans will likely become uninsured unless new “skinny” plans can be designed that meet the requirements of the law.

After several attempts at logging on the exchange, Danielle finally went to Kaiser’s online premium and subsidy calculator. What she found shocked and dismayed her. The premium for her family would be $5,711 per month for a Bronze plan. She also found out that her family would not qualify for a subsidy even though they are below the poverty line.

Danielle and her family fell into a gap created when the Supreme Court struck down Obamacare’s mandatory Medicaid expansion. In the 2012 ruling, the Court held that the federal government could not force the states to expand Medicaid to low income families. If states voluntarily expanded their Medicaid programs, the federal government promised to pay the full cost for three years and 90 percent thereafter. Twenty-five states, including North Carolina and Georgia, chose not to join the Medicare expansion. .

The Winston-Salem Journal estimated on Oct. 19 that as many as 300,000 North Carolinians under the poverty line may be affected by this Medicaid gap. Bloomberg, also on Oct. 19, noted that the number of Americans affected by the gap is estimated at 5.2 million nationwide.

According to the News Observer, North Carolina officials cited the cost of Medicare as well as systemic problems such as cost overruns and billing delays in rejecting the growth of the program. North Carolina’s Medicaid program cost $14 billion last year. The state’s portion was $3 billion, which represented about 15 percent of the state’s budget according to the North Carolina Department of Health and Human Services. In Georgia, Medicaid spending also makes up 15 percent of the state budget according to Georgia Health News.

“So much of our state revenue has been eaten away by the Medicaid budget,” said Justin Burr, a Republican member of North Carolina’s House health care committee. “I certainly don’t think we need to expand an entitlement program.”

The ability of the federal government to honor its promise to pay its share of new Medicaid costs is also in question. The federal government has been operating at a budget deficit for years. As the federal debt mounted during Barack Obama’s administration, congressional battles over spending have become increasingly frequent and acrimonious. In the final analysis, increased spending for the Medicaid expansion may force tax increases at both the state and federal level.

Since the unveiling of the Affordable Care Act’s health insurance exchanges on Oct. 1, many Americans have experienced cases of sticker shock. Even many Americans who qualify for federal subsidies have found that premiums are much higher than expected. Both CNN and the Fiscal Times list high prices among the top complains about Obamacare. In many cases, deductibles and out-of-pocket expenses are higher as well.

Danielle, who has a minor heart problem, says that she has not had health insurance in her adult life. She was worried about having to choose between paying the Obamacare fine and finding money for the health insurance premium for her family. There at least, there is some relief. Due to her family’s low income, she is exempt from the fine even though she will remain uninsured.

“It would be great to get coverage for just basic family doctor care at a reasonable price, Danielle said. “It just doesn’t make since to pay almost six grand for one or two visits a year with the cash price being a fraction of that.”

 

Originally published on Atlanta Conservative Examiner

Oklahoma lawsuit may deal Obamacare ‘fatal blow’

The Supreme Court upheld the constitutionality of the individual mandate in 2012, but now another lawsuit is challenging the Affordable Care Act on different grounds. The new lawsuit, brought by the State of Oklahoma, has its roots in a legal paper by Jonathan Adler, a professor at Case Western Reserve University, and Michael Cannon, director of health policy studies at the Cato Institute. The paper, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA,” argues that, according to the language in the law, Obamacare’s health insurance subsidies can only be applied to state exchanges, not exchanges set up by the federal government.

As Dick Morris explained in The Hill on Oct. 8, Section 1311 of the ACA establishes state health insurance exchanges. Section 1401 stipulates that refundable tax credits, the subsidies, are available only for health insurance purchased in Section 1311 exchanges, those set up by the states. Morris argues that the intent of Congress was to establish subsidies as an incentive for states to set up their own exchanges.

Only 16 states and the District of Columbia elected to form state health exchanges in spite of the promise of subsidies. One of these states, Oklahoma, filed suit in Pruitt v. Sebelius, challenging an IRS ruling that extended both the individual and employer mandates to all states according to lawyers.com. The suit claims that the employer mandate to provide health insurance to employees or pay a fine should not apply to states that did not set up their own health insurance exchanges. It also challenges the subsidies.

Although filed in 2011, a stay was issued until the Supreme Court ruled on the constitutionality of the Affordable Care Act. The federal government moved to dismiss the lawsuit after the stay was lifted, but a federal judge let stand the complaints against the employer mandate and subsidy. The court also ruled that the State of Oklahoma has standing in the suit as a large employer. The case is currently pending before the Eastern District United States Court of Oklahoma.

If the court eventually sides with Oklahoma, John Goodman of the National Center for Policy Analysis argues that it would be a “fatal blow” to Obamacare. “With so many states declining to set up exchanges,” he says, “Obamacare will be a disastrous failure if the courts agree with them.”

A victory for Oklahoma would also likely apply to other states, such as Georgia, that decided not to set up their own health exchange. As reported by Examiner, Governor Nathan Deal announced Georgia’s decision not to create an exchange in November 2012.

If the courts rule that the employer mandate and insurance subsidies do not apply in states with federal exchanges, it would destroy the delicate balance of the law in those states. Employers would not be fined if they declined to provide coverage for their employees. While the mandates for Obamacare’s “essential health benefits” would still apply in all states, subsidies would not be allowed in states with federal exchanges, making the cost of insurance prohibitively expensive.

While a court decision would not strike down the Affordable Care Act immediately, it would render the health law virtually nonexistent for employers in a majority of the country. While the individual mandate and fines would still apply, the lack of subsidies would mean that more people and companies would choose to opt out of purchasing insurance and the risk pool would shrink. Obamacare depends on young people buying expensive insurance to subsidize older and less healthy people.

If young, healthy people opt to pay the fine and employers choose not to provide health insurance, Obamacare will likely collapse under its own weight in short order. With Republicans controlling the House of Representatives, a new health care fix would require a bipartisan agreement, unlike when Obamacare was passed in 2010 with Democratic majorities in both houses and no Republican votes.

It seems as though Congress should have actually read the bill before they passed it.

Originally published on Elections Examiner