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Health insurers say Obamacare payments not a 'bailout,' warn Trump admin cutoff will hurt patients

Key Points
  • Major insurance industry groups said that the Obamacare subsidy payments that the Trump administration is ending are not bailouts.
  • The money reimburses insurers for discounts given to 6 million Obamacare customers for their out-of-pocket health costs.
  • The Trump administration said the payments are illegal without explicit authorization from Congress.
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A trio of major insurance industry groups on Friday decried the cutoff of billions of dollars of subsidy payments to insurers by the Trump administration, warning that patients will now find it "harder" to get the care they need.

Two of those groups, America's Health Insurance Plans and the Blue Cross Blue Shield Association also disputed claims by President Donald Trump that the cost-sharing reduction payments are a "bailout" for Obamacare insurers.

"We need constructive solutions that increase consumer choice, lower consumer costs, and stabilize local markets," the two groups said in a joint statement.

"Terminating this critical program will do just the opposite. This action will make it harder for patients to access the care they need. Costs will go up and choices will be restricted."

"Millions of hard-working Americans with modest incomes depend on cost-sharing reduction benefits to get access to medical care," the groups said.

"These benefits help real people every day, and if they are ended, there will be real consequences. These payments are not a bailout — they are passed from the federal government through health plans to medical providers to help lower costs for patients who see a doctor to treat their cancer or fill a prescription for a life-saving medication."

Trump previously referred to the CSR payments as "bailouts" when he threatened to kill them last summer.

Ceci Connolly, CEO of the Alliance of Community Health Plans, said, "We are deeply disappointed in the administration's actions this week to undermine access to affordable coverage for millions of Americans."

"While Washington continues to play politics,families across the country are wondering if they will have coverage this month or next," Connolly said.

The CSR reimbursements were estimated to be worth $7 billion to the nation's Obamacare insurers this year, and $10 billion or so next year.

If the payments are not restored, insurers will have to raise premiums to cover the costs of discounts that they must, by law, offer to qualified low-income Obamacare customers for out-of-pocket health charges.

About 6 million Obamacare customers qualify for those discounts to their copayments, coinsurance and deductibles.

Connolly said that those customers on average earn just $19,000 annually.

Trump administration health officials on Thursday decided to immediately cease paying insurers the CSR reimbursements after Attorney General Jeff Sessions advised them that the federal government had no legal authority to make those payments.

The Affordable Care Act says that the federal government is supposed to pay insurers the reimbursements.

But the Republican-led Congress refused to specifically appropriate the funds to make those payments. House Republicans sued the Obama administration when Obama officials kept making the payments despite lacking such authorization.

Although the House won that suit, the payments continued as the Obama administration appealed the case.

After taking office in January, Trump had continued the payments until Thursday.

Trump reportedly has told at least one lawmaker he would be open to the idea of restoring the payments if Republicans and Democrats in Congress could agree on a deal.

AHIP and the Blue Cross Blue Shield Association said, "We are committed to pursue every possible path to ensure that all Americans who depend on these benefits can continue to get the care they need when they need it."

Shares of health insurers were trading lower Friday, including Molina Healthcare, which shed more than 3 percent; Anthem, which fell more than 2 percent, and Centene, which was down more than 4 percent.