There’s been a lot of movement surrounding Obamacare, or the Affordable Care Act, in the past few days. President Donald Trump issued an executive order on health care and decided to cut off critical Obamacare subsidies last week. Trump also seemed to tout a new bipartisan Obamacare fix unveiled Tuesday before saying he couldn’t support it on Twitter less than 24 hours later on Wednesday morning.
The situation is so fluid it’s hard to keep track of exactly where things stand. Here’s what you need to know about the state of Obamacare.
At first, all eyes were on President Trump’s health care executive order to weaken Obamacare regulations last Thursday. The president directed federal agencies to make it easier for certain businesses to band together to offer skimpier health insurance plans that don’t meet Obamacare’s requirements for some types of mandated health benefits and which could have caps on coverage outlawed by the health law.
Then came the bombshell. Trump announced later the that same day he was finally making good on his repeated past threats to cut off critical Obamacare subsidies, called cost-sharing reduction subsidies, to insurance companies. The administration said these payouts were unconstitutional and amounted to “bailouts” for insurance companies. Trump later challenged Congress (including Democrats) to pass legislation to fix what he calls the “Obamacare mess.”
In reality, these Obamacare subsidies are given to insurers in exchange for them lowering how much lower-income Americans have to pay out-of-pocket for medical care under certain popular mid-level “Silver” Obamacare plans. The nonpartisan Congressional Budget Office (CBO) has previously estimated that without the subsidies, Obamacare premiums could spike 20%.
There’s a chance that ending these subsidies won’t have a catastrophic effect any time soon. Many Obamacare insurers assumed Trump would cut off the payments and baked that reality into their 2018 individual insurance rates (which health experts and insurance companies alike have said are higher than they originally would have been thanks to all the legislative uncertainty around the law). And the Affordable Care Act’s other subsidies, the tax credits to enrollees which help them pay their premiums, are still intact—meaning that for people who qualify for those subsidies, the net effect of Trump’s actions is actually to increase the amount of federal assistance they get in order to make up for the rising premiums.
Still, uncertainty is the insurance industry’s wolfsbane, and some Obamacare customers (particularly those who make too much money to qualify for subsidies) could face higher costs after the insurer payment cutoff. More firms could also choose to leave the health law marketplaces without legislative assurances.
That’s why Democratic Sen. Patty Murray of Washington and Sen. Lamar Alexander of Tennessee have been working on a bipartisan Obamacare fix for the past several months. That effort was seemingly derailed following the last attempt to repeal and replace Obamacare last month (the so-called Graham Cassidy bill); but following that legislation’s defeat and Trump’s subsidy decision last week, the pair of health committee leaders unveiled a new deal Tuesday to stabilize Obamacare markets.
Medical industry groups and a number of Democrats and Republicans praised the Obamacare deal’s overall structure. It would guarantee the cost-sharing reduction subsidies, restore the law’s outreach funding that the Trump administration had cut off, and also allow states to pursue alternative regulations without critically gutting Obamacare’s basic mandated benefits and framework.
But that deal now also appears dead in the water. Trump reportedly encouraged the agreement at first and even praised it; by Wednesday, however, he was again calling it an insurance company bailout because of the Obamacare subsidy funding. House Speaker Paul Ryan also sounded critical of the deal following Trump’s new statement and pushback from conservative GOP caucus members.
What happens next
The overall effect of the last week may be a return to square one. Obamacare still isn’t dead; but it continues to be hobbled by a series of administrative cuts and reigning uncertainty. The White House is continuing to insist that repeal and replace is the correct strategy. But there’s no telling if the Republican-controlled Congress can actually achieve that goal given its multiple failures to do so, through a variety of increasingly unusual legislative maneuvers, so far.
The question now is how much of Trump’s and conservative Republicans’ opposition to a bipartisan fix is strategic political positioning versus a firm line in the sand.