Trump to Democrats: Negotiate on Obamacare, or Else

President threatens controversial insurance subsidies unless lawmakers come to the table

by Jim Stinson | Updated 14 Apr 2017 at 6:30 AM

In the midst of what appears to be a political shift to the middle, President Donald Trump has at least one key campaign pledge he won’t shelf: the repeal of Obamacare.

Three weeks after Republican infighting killed an initial effort at repealing the Affordable Care Act, Trump is poised to use a maneuver that could effectively undermine the sustainability of Obamacare and expedite its collapse. On Wednesday, speaking to the Wall Street Journal, Trump threatened to withhold subsidies to insurers as a way to force Democrats to the negotiating table.

“What I think should happen — and will happen — is the Democrats will start calling me and negotiating.”

All Trump needs to do is pull federal attorneys off a case, and Obamacare could collapse.

That’s because Republicans in Congress sued the federal government in 2014 over subsidies to insurance companies. U.S. District Judge Rosemary Collyer last May declared those subsidies illegal because Congress never appropriated money for them.

But the administration of President Barack Obama was given time to appeal. The decision to continue the appeal is now in Trump’s court and he could easily tell federal lawyers to end the challenge.

Trump’s threat comes just several weeks after LifeZette explained on April 3 that Trump could effectively gut Obamacare, without involving Congress, by ending the appeal in court over subsidies for insurance companies.

The Obama Administration Lawsuit
A conference is set for May 22 on the lawsuit pending before the D.C. Court of Appeals on a challenge to the subsidies.

Insurance companies receive the subsidies to reduce out-of-pocket costs to some 6.4 million lower-income customers who purchased mid-level “silver” plans on the online exchanges set up by the Affordable Care Act.

The Affordable Care Act offers two main subsidies. The first, unaffected by the litigation, offers help paying monthly premiums for individuals making up to $47,520, or $97,200 for a family of four— 400 percent of the federal poverty line.

The second, known as "cost-sharing reductions," help people making less than 250 percent of the poverty line with co-pays, deductibles, and other out-of-pocket expenses not covered by insurance. It's those reductions Trump could target, by refusing to defend them in court — where they could lose anyway.

Experts told LifeZette earlier this month that the threat, if executed, would dismantle the Obamacare health-insurance markets.

Seth Chandler, a University of Houston Law Center professor and a visiting scholar at George Mason University’s libertarian Mercatus Center, told LifeZette, "It creates a lot of chaos if these payments stop. If the law were otherwise functioning well, I think it could withstand the loss of $9 billion. But in at least some states, I think this would be the straw that broke the camel’s back."

The move would also come at some political risk. If Trump and his government attorneys at the Justice Department decline to defend the payments, the Democrats will accuse Trump of deliberately sabotaging Obamacare.

"It’s a very tough choice," said South Texas School of Law Houston professor Josh Blackman, who wrote a book about the unravelling of Obamacare, told LifeZette earlier this month. "The safest bet is to continue making the payments and continue appealing the case. Then you’d have the very odd situation where [House Speaker] Paul Ryan would be suing [Secretary of Health and Human Services] Tom Price."

Even if Trump dropped the lawsuit, insurance companies would be allowed to jump in to protect their subsidies.

But at least one court decision against the subsidies has already been made. It's likely the subsidies could be doomed.

Trump Urges Negotiation
So Trump is now urging Democrats to come to the bargaining table to avoid a messy collapse of his predecessor's health care law.

"I don’t want people to get hurt," Trump told the Wall Street Journal on Wednesday. "What I think should happen — and will happen — is the Democrats will start calling me and negotiating."

But so far, that hasn't happened. Instead, Trump's threat — while music to the ears of many Republicans — has caused Democrats to accuse him of unsavory tactics. Senate Minority Leader Chuck Schumer (D-N.Y.), said Trump was "threatening to hold hostage health care for millions of Americans ... This cynical strategy will fail."

Even without Trump pulling back from the lawsuit over subsidies, insurance companies could believe that the issue has become too hot — and they could pull out of Obamacare exchanges immediately.

CNN Money reports that three insurers — Humana, Aetna and Wellmark — said they are pulling out of some or all Obamacare markets. More carriers are expected to announce their decisions soon, CNN Money reported.

More could follow, especially given that the White House had earlier assured insurers the subsidies would continue. The White House reversed course this week, perhaps sensing a valuable bargaining position too good to pass up.

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  3. obamacare
  4. repeal-and-replace
  5. subsidies
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