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 The decision is the most dramatic action Trump has taken yet to
weaken the Affordable Care Act, President Barack Obama's signature
healthcare law, which extended insurance to 20 million Americans.
The move drew swift condemnation from Democrats and threats from
state attorneys general in New York and California to file lawsuits.
Trump has been frustrated by Republicans' failure to repeal and
replace the law known as Obamacare, thwarting a promise he made
during his successful 2016 presidential campaign.
His decision is likely to please those among his political base who
detest the Obamacare system, which many Republicans have attacked
for years as an unneeded government intrusion in Americans'
healthcare.
In a nod to that same constituency, the president signed an
executive order earlier on Thursday to make it easier for Americans
to buy bare-bones health insurance plans exempt from Obamacare
requirements.
Senate Democratic Leader Chuck Schumer and House Democratic Leader
Nancy Pelosi derided the subsidies cut-off in a joint statement,
saying Trump would single-handedly push Americans' healthcare
premiums higher.
"It is a spiteful act of vast, pointless sabotage leveled at working
families and the middle class in every corner of America," they
said. "Make no mistake about it, Trump will try to blame the
Affordable Care Act, but this will fall on his back and he will pay
the price for it."
Insurers and proponents of Obamacare have implored Trump for months
to commit to making the payments, which are worth billions of
dollars. Several insurers have cited uncertainty over the payments
when hiking premiums for 2018 or exiting insurance markets
altogether.
Healthcare stocks have edged lower in recent days. Ending the
payments could hurt shares of insurers such as Anthem Inc, Molina,
Cigna Corp and Centene, which are offering plans on Obamacare
markets for 2018.
Trump has made the payments, guaranteed to insurers under Obamacare
to help lower out-of-pocket medical expenses for low-income
consumers, each month since taking office in January. But he has
repeatedly threatened to cut them off and disparaged them as a
"bailout" for insurance companies.
LAWSUITS
The White House said late on Thursday that it could not lawfully pay
the subsidies anymore.
A White House statement said that based on guidance from the Justice
Department, "the Department of Health and Human Services has
concluded that there is no appropriation for cost-sharing reduction
payments to insurance companies under Obamacare."
"In light of this analysis, the Government cannot lawfully make the
cost-sharing reduction payments," it said.
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New York Attorney General Eric T. Schneiderman said in a statement
he was prepared to lead other attorneys general in a lawsuit.
"I will not allow President Trump to once again use New York
families as political pawns in his dangerous, partisan campaign to
eviscerate the Affordable Care Act at any cost," he wrote.
The payments are the subject of a lawsuit brought by House
Republicans against the Obama administration that alleged they were
unlawful because they needed to be appropriated by Congress. A judge
for the federal district court for the District of Columbia ruled in
favor of the Republicans, and the Obama administration appealed the
ruling.
The Trump administration took over the lawsuit and had delayed
deciding whether to continue the Obama administration’s appeal or
terminate the subsidies, but in April Trump began threatening to
stop the payments. That case became more complicated in August when
a U.S. appeals court allowed 16 Democratic state attorneys general
to defend the payments and have a say in the legal fight.
The political turbulence has affected insurers' decisions.
Anthem Inc, one of the largest remaining Obamacare insurers, in
August scaled back its offerings in Nevada and Georgia and blamed
the moves in part on uncertainty over the payments.
Blue Cross and Blue Shield of North Carolina earlier this year
raised premiums by more than 20 percent, but said it would have only
raised premiums by about 9 percent if Trump agreed to fund the
payments.
The nonpartisan Congressional Budget Office estimated that cutting
off the insurer payments would cause premiums to rise 20 percent in
2018, and said that 5 percent of Americans would live in areas that
do not have an insurer in the individual market in 2018.
Trump has taken a number of other steps to undermine Obamacare. Last
week, the Department of Health and Human Services issued rules that
let businesses or non-profit organizations lodge religious or moral
objections to obtain an exemption from Obamacare’s mandate that
employers provide birth control in health insurance with no
co-payment.
The administration also slashed the Obamacare advertising and
outreach budget and halved the open enrollment period.
(additional reporting by Steve Holland; Editing by Michael Perry)
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