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The Trump administration is waffling on key Obamacare subsidies

President Donald Trump.
Jabin Botsford | The Washington Post | Getty Images
President Donald Trump.

The administration has a big decision on its hands right now: whether to continue a $7 billion Obamacare program that House Republicans say is illegal because Congress didn't authorize the spending.

Insurance plans really, really want to know what the White House plans to do on this particular program. But the administration isn't providing any clarity. Over the past 24 hours, it has sent reporters two statements that are difficult to parse — and definitely do not deliver on the certainty that insurers say would stabilize the Affordable Care Act marketplaces.

Why this Obamacare program matters a lot — and how Trump could end it. The health care law includes cost-sharing reductions, or CSRs, and they lower the cost of things like copayments and deductibles for Obamacare enrollees who earn less than 250 percent of the poverty line ($30,150 for an individual or $61,500 for a family of four).

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These CSRs are in addition to premium subsidies, which are available to people up to 400 percent of the poverty line. They are meant to give even more help to the neediest Obamacare enrollees.

Trump has an easy way to end these subsidies, if he wants. House Republicans filed a lawsuit in 2015 arguing that these payments were illegal because the ACA didn't include the right language to authorize the spending.

The Obama administration had vigorously pushed back against that argument, defending the subsidies in court. President Trump, however, could simply decide to drop the suit. He could agree that House Republicans are right that these subsidies are illegal, and his administration could the program.

Insurers say they need to know what Trump will do before they can decide to sell coverage on the Obamacare marketplaces next year.

"The uncertainty that has been fostered with the concerns about ... the continued and uninterrupted payment of cost-sharing reductions could do grievous harm to the individual market," Candy Gallagher, senior vice president of state policy at America's Health Insurance Plans, told regulators in a presentation.

So what will Trump do? An examination of two very confusing statements. An administration official released a statement to multiple news outlets Monday — including Vox and the New York Times — that said the Trump administration would continue this program so long as the lawsuit is pending. Here's what the statement said in full:

The precedent is that while the lawsuit is being litigated the cost-sharing subsidies will be funded. It would be fair for you to report that there has been no policy change in the current administration.

This sounds like the Trump administration plans to continue the program, at least when the lawsuit is active. But that left a key question unanswered: Does the Trump administration plan to continue defending the CSRs in court? I asked a spokesperson that question but never received an answer.

The New York Times reported on this statement with a story headlined "Trump Administration to Pay Health Law Subsidies Disputed by House." But the Department of Health and Human Services quickly threw cold water on that story, with a statement from spokesperson Alleigh Marré:

The New York Times report is inaccurate. The administration is currently deciding its position on this matter. We have not been contacted by Democrats to help save Obamacare, perhaps because they consider Obamacare to be a losing cause. Democrats need to help solve this failed Obamacare plan. The report was in reference to the current status of the lawsuit and is not an indication of what will happen in the future. No decisions have been made about how the administration will proceed.

So it seems like we're back at square one, without any clarity around what the Trump administration will do with these payments. The administration may still be figuring out its position (Politico has reported that the White House was divided, as of last week). Or the White House may have made a decision that it is not keen to advertise. (Headlines about continuing an Obamacare program are not great, after all, for an administration that supports dismantling the law.)

This is damaging to the Affordable Care Act. The uncertainty around the future of this program is making insurers skittish about signing up for the Obamacare markets. When two Iowa insurers pulled out of Obamacare last week, both cited the law's uncertain future.

Part of insurers' worry is about the CSR money itself — $7 billion is a lot! Premiums would rise an estimated 19 percent should those funds disappear.

But CSRs matter in a bigger way, too, that is about more than money. Insurance plans want to know whether the Trump administration plans to stabilize Obamacare — or, as the President has suggested, let it explode. The decision on CSRs will be a bellwether of which way the administration leans. Right now we just don't have a great indication of where this will land.

The new Freedom Caucus plan … sounds like the old Freedom Caucus plan

Because there is no rest for the weary, Freedom Caucus Chair Mark Meadows (R-NC) is talking about yet another possible Obamacare replacement plan. USA Today reports the plan "would leave in place the existing law's mandates for insurers to cover people with pre-existing conditions."

This is not a new policy position — and it still leaves lots of space to dismantle Obamacare. A law that mandates insurers cover all customers is useless the law also has a mandate that insurers charge sick customers reasonable prices. Otherwise, you could see insurers "offering" plans with premiums upward of $1,000 or even $5,000 — technically an "offer of coverage," but likely unaffordable for most.

The Freedom Caucus has been quite clear, so far, that it does not want to keep Obamacare's mandate that insurers charge sick and healthy people the same price, a provision called community rating.

Meadows said he is "optimistic" the House might return early from recess to vote. VoxCare, however, is not. We've seen a lot of hubbub lately around possible floor votes on a health care bill — promises that the House would vote on the American Health Care Act in late March and a rumored vote on an amendment to that plan last week. But the House has taken no floor votes on health care this year for a simple reason: GOP legislators can't agree on legislation to replace Obamacare. The more false alarms there are, the closer Republicans come to being the party that cried vote.

The talk of votes and new plans is good politics and posturing. But it doesn't get Republicans any closer to agreement.

What surprised Elisabeth Rosenthal the most reporting on American health care prices

My colleague (and frequent VoxCare contributor) Julia Belluz sat down with Elisabeth Rosenthal to discuss her new book, out today, An American Sickness: How Healthcare Became Big Business and How You Can Take It Back. One of the most interesting exchanges was about what surprised Rosenthal the most in reporting her book:

Julia Belluz: In the book, you make it very clear that we got to this place because the values and techniques of the business world supplanted many of the values and techniques of medicine. Were there any particular profit-maximizing maneuvers in medical care that surprised you?

Elisabeth Rosenthal: I was fascinated by that world of "physician extenders." We have all experienced seeing the name of a doctor on your bill and thinking, "I never saw a doctor of that name." And you realize part of the reason that happens is because you didn't see that doctor. You saw a medical professional working under that doctor, but the doctor — because of years of lobbying by doctors groups — is now allowed to bill for that visit in his own name. There's someone in the book who got bills both from the anesthesiologist and nurse anesthesiologist who weren't present for the procedure.

In any other world, you'd think of that as kind of double billing. It's not quite fraudulent, but it feels abusive. And yet it's totally legal. Have you ever wished to be in two places at once? Doctors can be for the purposes of billing.

Kliff's Notes

With research help from Caitlin Davis

  • "The watchdogs keeping an eye on HHS and Obamacare": "American Oversight, a group of lawyers that launched last month, says it's going to use the Freedom of Information Act to dig up a lot of emails and other documents about how the Trump administration is making its decisions about Obamacare. It's mostly trying to promote transparency, executive director Austin Evers told me yesterday, and it's ready to file lawsuits to get faster FOIA responses. But it will also be looking for evidence of 'sabotage,' he said, and it's ready to call in outside lawyers to take the administration to court if that happens." —David Nather, Axios
  • "This is how Obamacare might actually explode": "Despite efforts to rekindle repeal talks, insurers have remained largely focused on whether payments embedded in the law, called cost-sharing reductions, are going to continue as they make decisions about selling plans next year. A recent Congressional Budget Office analysis found the markets would 'probably be stable in most areas' under the current law, but if billions of dollars in payments made under current law are discontinued — or even at risk of disappearing — it could scare off insurers." —Carolyn Y. Johnson, Washington Post
  • "How Democrats Can Save Obamacare and Trump Can Save His Presidency": "If Trump makes a deal with Democrats, he can keep at least some of his promises, and claim that whatever patched-up version of the law is a 'replacement' for Obamacare. (They could even 'repeal' the law and replace it with something 90 percent the same.) Persisting in the current course, which will dead-end in either the House or the Senate, means failing to deliver on all his promises: no repeal, no terrific new plan that takes care of everybody." —Jonathan Chait, New York magazine