President Donald Trump has told advisers he wants to end payments of key Obamacare subsidies, a move that could send the health law’s insurance markets into a tailspin, according to several sources familiar with the conversations.
Many advisers oppose the move because they worry it will backfire politically if people lose their insurance or see huge premium spikes and blame the White House, the sources said. Trump has said that the bold move could force Congressional Democrats to the table to negotiate an Obamacare replacement.
Lawyers and other administration officials are trying to thread the needle.
Trump told aides in a Tuesday Oval Office meeting that he wants to end the payments to insurers, according to people familiar with his comments. Trump has previously expressed conflicting opinions on the issue. Insurers have been pressing for certainty as they plan for next year.
Estimated at $7 billion for this year, the payments go to insurance companies to reduce deductibles and other out-of-pocket costs for low-income consumers — an estimated 7 million people in 2017. Insurers are on the hook under the health law to keep paying even if the federal money stops.
Many senior administration officials, including Health and Human Services Secretary Tom Price, are leery of ending the payments, however, because it could immediately unravel the Obamacare insurance markets and strongly discourage insurers from participating next year. Insurance companies in many states would be allowed to pull out of the Obamacare markets, which in many states already have scant competition.
Several polls show that the public would blame the administration and the Republican-controlled Congress if the markets collapsed.
The issue is coming to a head: On Monday, the Trump administration has to inform the U.S. Court of Appeals for the District of Columbia how it wants to resolve a lawsuit the House Republicans brought against the Obama administration saying the White House was making the payments without congressional approval. The White House and House could also ask for a 90-day hold on the case.
Some in the administration are hoping to convince Trump to change his mind. Mick Mulvaney, the administration’s budget director, is more "agnostic" on the issue, according to a person close to him, and has presented Trump with options other than immediately suspending the funding.
The lawsuit is moving ahead against the backdrop of the effort on Capitol Hill to repeal the Affordable Care Act. Any bill would be expected to unwind the health law over at least a year. But defunding the cost-sharing program could destabilize the market immediately.
In a statement, the administration said the White House has told Congress it will continue the payments through May but no commitment has been made beyond that.
“No final decisions have been made at this time, and all options are on the table," the statement said.
The administration has said in the past it would continue to make the payments while the lawsuit, House v. Tom Price, is pending. The D.C. District Court ruled in 2016 that the Obama administration had been illegally funding the program. The Obama administration appealed that decision but the court did not rule on the issue before Trump was sworn in.