He elaborated in another tweet, “If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies…will end very soon!”
It’s not accurate to call the cost-sharing subsidies a bailout, said Tim Jost, a professor emeritus at Washington and Lee University School of Law in Virginia.
“They are no more a bailout than payments made by the government to a private company for building a bomber,” he said.
That’s at the root of the Trump administration’s potential legal problem if the president makes good on this threat.
The health law clearly requires insurers to help low-income consumers with their copays and deductibles. Nearly 3 in 5 HealthCare.gov customers qualify for the assistance, which can reduce a deductible of $3,500 to several hundred dollars. The cost to the government is about $7 billion a year.
The law also specifies that government “shall make periodic and timely payments” to reimburse insurers for the cost-sharing assistance that they provide.
Nonetheless, the payments remain under a cloud because of a disagreement over whether they were properly approved in the language of the health law, by providing an “appropriation.”
The Constitution says the government shall not spend money without a congressional appropriation.
Think of an appropriation as an electronic instruction to your bank to pay a recurring monthly bill. You fully intend to pay, and the money you’ve budgeted is in your account. But the payment will not go out unless you specifically direct your bank to send it.
House Republicans trying to thwart the ACA sued the Obama administration in federal district court in Washington, arguing that the law lacked specific language appropriating the cost-sharing subsidies.
The district court judge agreed with House Republicans, and now the case is on hold before the U.S. appeals court in Washington. A group of state attorneys general are asking the appeals court to join in the case, in defense of the subsidies.
Both Bagley and Jost have followed the matter closely, and they disagree on whether the health law properly approved the payments to insurers. Bagley says it did not; while Jost says it did.
However, the two experts agree that insurers would have a solid lawsuit against the administration if Trump stops the payments. Insurers could sue in the U.S. Court of Federal Claims, which hears claims for money against the government.
“The ACA promised to make these payments — that could not be clearer — and Congress has done nothing to limit that promise,” said Bagley.
“I think there would very likely be litigation if the Trump administration tries to cut off the payments,” said Jost.
Another way to resolve it: Congress could appropriate the money, even if temporarily, for a couple of years.
“Simply letting Obamacare collapse will cause even more pain,” House Ways and Means Committee Chairman Kevin Brady, R-Texas, said recently.
If the president makes good on his threat, experts estimate that premiums for a standard “silver” plan would increase by about 19 percent. Insurers could recover the cost-sharing money by raising premiums, since those are also subsidized by the ACA, and there’s no question about their appropriation.
But millions of people who buy individual health care policies without any financial assistance from the government would face prohibitive cost increases.
And more insurers might decide to leave already shaky markets.
California Attorney General Xavier Becerra says Trump’s tweets will bolster arguments from him and his counterparts in other states to intervene in the case.
“We need somebody who will stand up in court and defend the subsidies against the erratic nature of President Trump,” said Becerra.