The government will make this month's payments to insurers under the Obama-era healthcare law that President Donald Trump still wants to repeal and replace, a White House official said Wednesday.
Trump has repeatedly threatened to end the payments, which help reduce health insurance copays and deductibles for people with modest incomes, but remain under a legal cloud.
A White House spokesman said "the August payment will be made," insisting on anonymity to discuss the decision ahead of the official announcement. The so-called "cost-sharing" subsidies total about $7 billion this year and are considered vital to guarantee stability for consumers who buy their own individual health insurance policies.
Insurers say they want to the administration to do more, and guarantee the payments at least through next year. But on Capitol Hill, a senior Republican applauded Trump's move.
"State insurance commissioners have warned that abrupt cancellation of cost-sharing subsidies would cause premiums, copays and deductibles to increase and more insurance companies to leave the markets," said Sen. Lamar Alexander, R-Tenn., chairman of the Health, Education, Labor and Pensions Committee. "Congress now should pass balanced, bipartisan, limited legislation in September that will fund cost-sharing payments for 2018."
The Congressional Budget Office reported this week that premiums for a popular type of individual health care plan under the Affordable Care Act would rise sharply, and that more people would be left without options for coverage, if Trump kept his threat to stop the payments. Moreover, ending the payments would only increase federal deficits since it would trigger a rise in separate health law subsidies for premiums, wiping out any potential savings.
The subsidies are snared in a legal dispute over whether the Obama health care law properly approved the payments to insurers. Adding to the confusion, other parts of the law clearly direct the government to reimburse the carriers.
The disagreement is over whether the law properly provided a congressional "appropriation," similar to an instruction for the Treasury to pay the money. The Constitution says the government shall not spend money unless Congress appropriates it.
House Republicans trying to thwart the health law sued the Obama administration in federal court in Washington, arguing that it lacked specific language appropriating the cost-sharing subsidies.
A district court judge agreed with House Republicans, and the case has been on hold before the U.S. appeals court in Washington.
For months, Trump has been raising the prospect of terminating payments as a way to trigger a crisis and get Democrats to negotiate on a health care bill.
After the GOP drive to repeal "Obamacare" collapsed, the president tweeted: "As I said from the beginning, let ObamaCare implode, then deal. Watch!"
Trump elaborated in another tweet, "If a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies...will end very soon!"
But with polls showing the public would blame Trump for "Obamacare" problems on his watch, congressional Republicans are not keen on going that route.
It's estimated that nearly 18 million people purchase individual health insurance policies. About half of them pay the full cost themselves and would risk the biggest disruptions from a spike in premiums.
Democratic Sen. Patty Murray of Washington, who is working with Tennessee Sen. Alexander to hold bipartisan hearings next month, said Trump should clear up the uncertainty for good.
"People shouldn't have to wonder each month whether President Trump is going to throw the health care system into chaos and cause premiums to spike," she said.
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