White House wonders: Should we blow up ObamaCare by ending its cost-sharing subsidies?

White House wonders: Should we blow up ObamaCare by ending its cost-sharing subsidies?

The cost-sharing subsidies aren’t the same as the tax credits under ObamaCare. The latter are what you get from Uncle Sam to help pay your premiums; the former are what you get to help defray your out-of-pocket costs if you buy a Silver plan on the exchange and if you meet certain income thresholds. Put the two together and you have the feds helping to pick up the tab on both the front end and the back end of an individual’s health-care process. Naturally it’s lower-income people — Trump’s working-class base — who benefits most from them.

And now the White House is wrestling with whether to cancel them, which would likely trigger a collapse in ObmaCare as insurers flee the exchanges, fearful that subsidy-less consumers will no longer be able to pay their medical bills. A now familiar dynamic: In one corner there’s Steve Bannon (allegedly), in the other Jared Kushner.

One key lawmaker said sentiment is running toward preserving the subsidies to keep the insurance market stable — an irony given that the House Republicans went to court to stop the Obama White House from spending the money without a congressional appropriation. Congress had refused to authorize the spending as it sought to undermine the health law. The Congressional Budget Office has estimated the cost for this year would be about $7 billion…

One senior official said that the Department of Health and Human Services and the White House Office of Management and Budget were studying the impact of abruptly stopping billions of payments to the health plans that participate in the Obamacare markets. Insurers would have to pick up these costs, regardless of whether the federal funds are released.

Uncertainty about the subsidies is already weighing heavily on the health insurance industry. A lot of health plans have already said they are reducing their participation in health law markets next year, or are considering rolling back; the loss of the cost-sharing subsidies would be a deciding factor.

“Huge priority,” summed up one insurance lobbyist.

“Jared is a liberal Democrat,” said one White House official today to Rosie Gray, who just published the latest chapter in the Bannon/Kushner feud. (“I’m sure Jared and Ivanka are very embarrassed by Steve’s politics,” according to another.) Not surprisingly, Kushner reportedly favors continuing the subsidies. What’s more surprising is that the populist Bannon allegedly wants to get rid of them, notwithstanding the effect of that on working-class recipients. The idea, I assume, is to trigger ObamaCare’s meltdown, whatever the cost in market disruption. The sooner that happens, the sooner Republicans and Democrats in Congress will be forced to come to the table to agree on a replacement system. And remember, Trump reportedly told House Republicans a few days after Ryan introduced their health-care bill last month that if nothing ends up passing, the GOP will simply kick back, wait for O-Care to implode, and then blame Democrats for having passed such a garbage law in the first place. A meltdown hurts Schumer and Pelosi more than it hurts Trump and Ryan — in theory.

But … if you’re going to gamble on that being true, shouldn’t you prefer the Kushner approach of preserving ObamaCare as-is as much as possible until it collapses? The more the White House meddles with it by, say, stripping away subsidies, the easier it is for Pelosi and Schumer to claim that the law would have worked just fine if Trump hadn’t sabotaged it. I think Republicans are already playing a dangerous game in assuming that voters will reach back to the previous administration to assign blame if the health-insurance industry tanks instead of blaming the GOP for not trying hard enough to get their own replacement system up and running before the crisis struck. And there’s data from Kaiser to bear that out:

Imagine those numbers if the media widely publicizes the fact that the White House could have kept the cost-sharing subsidies going to prop up ObamaCare but decided to get rid of them. If they do end up yanking the subsidies, that’ll mark the second time in less than a month that Trump has pursued a health-care strategy weirdly at odds with the populism that delivered him the White House. The House GOP’s health-care bill was disproportionately tough on older, rural blue-collar voters who are on the cusp of qualifying for Medicare but not quite 65 yet. Those are core Trumpers, and yet they would have been stiffed if the Trump/Ryan plan had happened. Now lower-income voters may lose the subsidies. I can understand why a fiscal conservative might be okay with that, but Trump’s no fiscal conservative. (Neither is Bannon, for that matter.) So what gives?

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