Trump dangles Obamacare payments to force Dems to the table

President Donald Trump wants to use a key Obamacare subsidy program as leverage to draw Democrats to the negotiating table on health care, three administration officials with knowledge of Trump’s thinking told POLITICO.

Trump could deliver an immediate and fatal blow to the Obamacare marketplaces if he scraps the subsidy program, worth an estimated $7 billion this year. These cost-sharing subsidies, which help insurers pay medical bills for low-income customers, have been the subject of a long-running lawsuit that the White House could drop at any time.

Until now, the president had appeared noncommittal, while his top advisers disagreed on whether to continue the payments as they weigh a broader repeal strategy.

This week, though, the self-styled negotiator-in-chief stepped up to put the squeeze on Democrats, resulting in conflicting signals from his administration. On Monday, the Department of Health and Human Services suggested in a statement to the New York Times that the administration may continue the payments. On Tuesday, however, HHS condemned the report and said no decision has been made.

Two administration officials said the HHS rebuttal was personally ordered by an incensed Trump, who feared that the Times story hurt his negotiating position. Trump took the unusual step of calling HHS Secretary Tom Price to dictate a blistering statement that challenged the story and swiped at Democrats, one senior administration official said.

“We have not been contacted by Democrats to help save Obamacare, perhaps because they consider Obamacare to be a losing cause. Democrats need to help solve this failed Obamacare plan,” read the statement, which was attributed to HHS spokeswoman Alleigh Marre.

On Wednesday afternoon, Trump went further still, publicly expounding on his plan to use Obamacare subsidies as negotiating leverage. “I don’t want people to get hurt,” Trump said, in a conversation with the Wall Street Journal. “What I think should happen — and will happen — is the Democrats will start calling me and negotiating.”

The escalating statements are a microcosm of Trump’s approach to Obamacare repeal, the official said. Trump is willing to cut deals without sweating the policy details, so he was furious when his administration appeared to undercut his negotiation position.

"POTUS wants to use [the subsidies] as leverage," the senior official told POLITICO. "When Obamacare fails on its own, the Dems will want to come to the table."

HHS declined to say whether Trump was involved in crafting the department’s response to the Times story. “We don’t comment on the details of conversations between the president and the secretary,” Marre said.

Democrats are adamant that they won’t negotiate on subsidies, which lower medical costs for nearly 7 million Obamacare customers.

“Failing to make these payments would be a direct effort by the administration to further undermine the health care system in this country, putting care for millions of Americans at risk,” said Matt House, a spokesman for Senate Minority Leader Chuck Schumer. "President Trump has an obligation to drop his attempts to repeal the Affordable Care Act, and instead work with Democrats to strengthen it.”

Major health care and business groups — including the Chamber of Commerce, one of the Obamacare’s harshest critics — are growing increasingly anxious over the fate of the subsidy program. In a Wednesday letter, a broad coalition warned of a potential calamity if Trump doesn’t immediately rescue the subsidies.

“Without funding of the [subsidies] by Congress and the Administration, there could be a ripple effect in the individual insurance market raising coverage costs for everyone,” read the letter signed by the American Medical Association, America’s Health Insurance Plans, the Chamber and other groups.

House Republicans in 2014 sued the Obama administration to halt the subsidy program, contending that it illegally sent payments to insurers without congressional appropriation. A federal judge sided with the House last year, but the Obama administration appealed the decision, allowing the payments to continue to flow. The Trump administration must decide by next month whether it will fight the lawsuit to preserve the subsidies.

Insurers say they need clarity by June on whether the White House will continue to pay the cost-sharing subsidies. Without the subsidies, many insurers would likely withdraw from the Obamacare marketplaces, potentially leaving millions without insurance options next year. Some insurers have recently announced plans to abandon Obamacare in 2018, citing financial losses and deep uncertainty about the future of the individual marketplaces.

Trump has often mused about letting Obamacare fail to force Democrats to negotiate on the stalled repeal bill. It’s a risky strategy, though. Trump contends that Democrats would take the blame for any fallout from the law’s collapse, but Republicans are nervous that voters would fault them. Recent polling shows those concerns are well-founded — 61 percent of the public says that Trump and Republican lawmakers are now responsible for Obamacare’s problems, a Kaiser Family Foundation survey found this month.

Some House Republicans, hoping to avoid disruptions in health insurance coverage, have also said they would look to keep the cost-sharing subsidies flowing as long as Obamacare is still in place.

POLITCO reported last week that the White House was split over the subsidies, with White House chief strategist Steve Bannon and allies arguing that Trump should halt payments. Ivanka Trump, Jared Kushner and chief economic adviser Gary Cohn are among those who want to preserve the subsidies for now.

"I don’t think Trump really wants to cut the subsidies, because he’d get blamed for people losing insurance," a White House official told POLITICO. "But right now it might be his biggest way to force people to do something.”

After signaling he wanted to move on from Obamacare, Trump this week said he wants to get a deal on health care done before turning to tax reform. That’s partially because Republicans can use the savings from the health care bill to offset the cost of overhauling the tax code, one of Trump’s top priorities.

“Now, if it doesn’t happen fast enough, I’ll start the taxes,” Trump said in an interview on Fox Business Network on Tuesday. “But the tax reform and the tax cuts are better if I can do health care first.”

Jennifer Haberkorn contributed to this report.

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