President Donald Trump's move to end subsidies to health insurance companies through Obamacare will end up saving billions in spending, Office of Management and Budget Director Mick Mulvaney told CNN Friday.
The subsidies, known as cost sharing reduction payments (CSR), are paid to insurance companies and not individuals, as some Democrats have tried to imply, Mulvaney said.
"These payments are payments to insurance companies. I cannot believe that [House Minority Leader] Nancy Pelosi was just on your screen there defending bailout payments to large corporations. Typically, the Democrats are against that. It's sort of like the shoe is on the other foot here. The bottom line is these are bad policy and the payments are not appropriate," Mulvaney said.
The CSR payments were originally placed in the Affordable Care Act (Obamacare) to balance the costs that insurance companies would take on for offering lower deductibles and copays to low-income individuals. Last year, the CSR payments accounted for approximately $7 billion in spending.
While opponents of Trump's move have criticized him, saying individuals would end up seeing a hike in premiums due to the insurer's loss of revenue, Mulvaney said insurance companies were already mandated under Obamacare to keep premiums at "a certain level" and the funds were only there in the first place to "pay off" insurance companies when the law was first enacted.
"Those companies are already required by law to keep the premiums at a certain level. What this was was essentially a payoff to the insurance companies to support Obamacare in the first place back in 2009/2010. It's been a terrible policy," Mulvaney said.
"If you follow the money here, which is what we do at the Office of Management and Budget, are checks from the Treasury to some of the largest health insurance companies in the country. That's what this was. This was not a subsidy to you or me or anyone else," he added.
Insurance companies had done "extraordinarily well since Obamacare became the law of the land," Mulvaney maintained. In addition, he said the payments were unconstitutional.
"The Department of Justice came out with a letter earlier this week, said they can no longer defend the Obama position these are legal payments and we had to stop them."
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