President’s Budget Muddies the Water on Obamacare

Trump’s budget exposes cracks within the party by simultaneously pushing for the repeal of Obamacare while moving to fully fund payments to insurers that Republicans historically hate.

President Trump speaks about health care at the White House on July 24, 2017.
AP Photo/Alex Brandon
Erin Durkin
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Erin Durkin
Feb. 19, 2018, 8 p.m.

President Trump’s 2019 budget, while pushing for Obamacare repeal, wants to provide controversial payments to insurers that conservatives have blasted as “bailouts.” The request has highlighted, rather than bridged, rifts within the Republican Party.

The budget specifically backs repeal legislation that would take marketplace subsidies and Medicaid-expansion spending and turn it into a block grant to the states. But it was coupled with a request to fully fund cost-sharing reductions and the risk-corridor program.

Asking for these payments, without much explanation in the budget, has befuddled some conservative lawmakers and groups.

“When we saw this thing, we just thought this was really kind of an odd thing for [Trump] to do, because frankly even the Obama administration didn’t go as far,” said Robert Moffit, a health-policy senior fellow at the Heritage Foundation. “That’s what’s interesting about this, right? The Obama administration was sued by the insurers and this guy, the president, he basically is willing to settle.”

The cost-sharing subsidies, which were cut off by the White House last year, were payments made to insurance companies that covered the out-of-pocket costs of low-income consumers.

Rep. Tom Cole, who chairs the appropriations subcommittee that oversees the Health and Human Services Department’s budget, said the payments would have to be coupled with reforms. “I’ve never been thrilled with those payments unless they’re coupled with meaningful reform, and when people ask me what that is, I say, ‘Reforms that make Democrats wince’ … I don’t want to go home saying I helped prop up the system,” he said.

But Rep. Charlie Dent asserted that these payments need to be taken care of and that there is no support for the repeal legislation. He added, though, that the administration appeared to be sending unclear signals around Obamacare.

“I gotta say, there seems to be a bit of ambiguity in that request,” he said.

The other controversial set of payments stem from the risk-corridor program. This was a three-year program established by the Affordable Care Act that cushioned insurers from extreme gains and losses in the marketplace.

The program required profitable companies to pay into the fund to offset insurers that receive higher medical claims. But insurers lost more money than gained, and Congress at the end of 2014 restricted the government’s ability to fill in the gap.

As of November, health care expert Timothy Jost wrote for Health Affairs Blog that the government could owe more than $12 billion, and insurers have brought lawsuits to retrieve the payments. Now, the budget is asking for the program to be paid in full and for it to be exempted from sequestration.

“It’s unacceptable that programs that matter to #Florida could see cuts while the [government] continues to bail out private insurers to protect them from consequences of #Obamacare,” wrote Sen. Marco Rubio on Twitter soon after the budget was released.

The Koch-backed Americans for Prosperity additionally blasted the administration’s decision to include the payments in its 2019 budget.

“Including CSRs and risk corridors in the White House budget would only prop up the failing health care law. Obamacare was manipulated to put the profits of private health insurance companies ahead of tax-paying Americans, and it’s good that we have put an end to these bailout programs,” the group said.

House Energy and Commerce Committee Chairman Greg Walden said the requests are a signal that health care costs need to be brought down. “What I think it says is we gotta find a path forward to try and get rate relief for people who are getting stuck with really high insurance bills that are only expected to go up and up and up and it’s unsustainable,” he said.

But experts question whether restoring these payments would do much in the way of stabilizing the markets. “The reality is that funding cost-sharing subsidies and risk corridors would do very little to stabilize the insurance market at this point,” said Larry Levitt, senior vice president for health reform at the Kaiser Family Foundation.

“Insurers and states largely responded to the termination of CSR funding by holding consumers harmless,” he added. “All else equal, insurers would probably like to have CSRs funded rather than having to build the cost into premiums, but it’s not a big issue. Funding risk corridors would funnel money to insurers that lost money, but not really help the market going forward.”

Rather, a federally-funded reinsurance program would be helpful in bringing premiums down, said Levitt. Lawmakers are considering proposals that would provide cost-sharing payments and funding for reinsurance programs. The road for such bills has not been smooth as they hit the familiar snags among Republicans who are concerned about appearing to support Obamacare.

The Republicans’ struggle may stem from not having a cohesive vision about the future of the health care system. Democrats have now jumped onboard with the single-payer idea, Moffit noted, and “the Left now has a comprehensive vision of reform.”

“I honestly don’t think the American people will buy it, but they have one,” he said. “The problem on the conservative side, or the Republican side, is they’ve been involved in circular firing squads over bits and pieces of health policy, like insurance regulation or to the degree to which there should be risk rating in the insurance market.”

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