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White House To End Health Care Subsidies


President Trump struck another blow against the Affordable Care Act. His administration said last night it would end a subsidy to insurance companies. The subsidy helps to make health insurance affordable for Americans with low incomes. So what's that mean for consumers regardless of their income? And what's that mean for the law that the president has been working to undermine? NPR's Scott Horsley is here. Good morning, Scott.

SCOTT HORSLEY, BYLINE: Good morning, Steve.

INSKEEP: What is the case for ending these subsidies?

HORSLEY: The White House couched this with a legal rationalization. They cited a Justice Department opinion that the subsidies are illegal because there was no annual authorization for them from Congress. That's been the subject of a long-running lawsuit brought by House Republicans. But beyond that legalistic argument, this is another way for the Trump administration to undermine the Affordable Care Act's insurance exchanges that the president and his GOP colleagues were unable to dismantle through an act of Congress.

INSKEEP: And the president's been pretty frank about that. In fact, he's on Twitter again this morning saying Obamacare is imploding. Are you telling me that this is really an effort to help make Obamacare implode?

HORSLEY: Yes. And this is just one of the ways that the Trump administration has sought to turn that forecast of implosion into a self-fulfilling prophecy. The administration has also made it harder for people to sign up for insurance through the exchanges by shortening the upcoming enrollment period. They have promised to shut down the website to sign up on a weekly basis for maintenance. They've gutted the marketing budget that was intended to help attract more people into the insurance exchanges. And also just yesterday, the president signed an executive order that relaxes the rules for alternative forms of health insurance, which could result in a price break for young, healthy consumers but wind up driving up prices for those who need insurance the most.

INSKEEP: So let's focus on the effects of this latest move to stop paying this subsidy to insurance companies. And the president is tweeting that this just harms pet insurance companies. But it's money that was intended to help lower insurance rates for people a little above the poverty line. So we're talking about people who are probably working, but they're making $30,000 a year, $40,000 a year, $50,000 a year for a family. And that is what the subsidies were for. What happens to the markets and what happens to everybody's premiums when those subsidies go away?

HORSLEY: Well, it's important to say that the cost-sharing payments to consumers will continue. So this is really going to hit the insurance companies. But they will compensate by raising premiums. And in fact, a lot of insurance companies have already sort of priced this threat in as they develop their premium forecast for the coming year. This threat, which the president's been waving around for a while now, is a significant ingredient in those double-digit premium hikes that we've seen forecast for 2018. Even though this threat has been out there, you know, it's one thing to sort of pull the pin on the grenade and wave it over your head. It's another to lob that grenade into the insurance marketplace. And that's what the president's done here.

INSKEEP: Scott, are you telling me that everybody's insurance premiums are going to go up at least a little bit, maybe a lot because insurance companies have to compensate for the loss of this subsidy?

HORSLEY: That's correct. People in the insurance exchanges of Obamacare...

INSKEEP: People in the insurance exchanges - people doing it...

HORSLEY: ...Not necessarily people who are getting their insurance through their employer which, of course, is the bulk of the market.

INSKEEP: Yeah, but we've been hearing...

HORSLEY: ....But for people in the individual insurance market - yes, this will raise their premiums.

INSKEEP: OK. So you mentioned that there is a legalistic argument here, an argument that Congress should have annually appropriated this subsidy. The Obama administration took a different view that they'd approved it once and that was enough. Are Democrats likely to make their own legal argument here?

HORSLEY: There will probably be legal challenges. There's already been a threat of a legal challenge from state officials. The other thing that could happen is this could become a showdown at the end of the year if congressional Democrats say, you need to restore these cost-sharing subsidies as a cost of keeping the government's lights on. That's another potential way this ends.

INSKEEP: Whatever happened to the bipartisan effort in the Senate to fix the insurance markets, which a number of senators began after efforts to repeal or replace Obamacare failed?

HORSLEY: That has stalled. That was an effort led by Republican Senator Lamar Alexander. It's stalled, although it could come back around.

INSKEEP: Scott, thanks very much - always a pleasure talking with you.

HORSLEY: You're welcome, Steve.

INSKEEP: NPR White House correspondent Scott Horsley talking with us on this morning after the Trump administration said it would end a subsidy to insurance companies under the Affordable Care Act. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.