Donald Trump got in front of Chuck Schumer and Hakeem Jeffries this weekend on an extension of ACA subsidies. But did he get ahead of his own party at the same time?
White House sources leaked a plan this weekend to extend pandemic-emergency subsidy increases for another two years once they expire in January. Axios reported at the time that the extensions would attempt to shift the payments from insurers directly to consumers through the use of health-savings accounts (HSAs), with encouragement to choose less-expensive coverage and use the money for co-pays instead. However, even that reworked extension proposal turned into a Thanksgiving turkey among House Republicans, with Speaker Mike Johnson warning that it had little support among his caucus:
Speaker Mike Johnson (R., La.) cautioned the White House that most House Republicans don’t have an appetite for extending enhanced Affordable Care Act subsidies, according to people familiar with the matter, showing how hard it will be politically to stave off sharp increases in healthcare costs next year for many Americans.
The message from Johnson, in a phone call with administration officials, came as President Trump’s advisers were drafting a healthcare plan that extended the subsidies for two years.
The warning underscores the hurdles facing any deal in coming weeks. Lawmakers have a mid-December deadline for healthcare votes promised as a condition for Democrats voting to end the government shutdown earlier this month. The enhanced subsidies expire at the end of the year, affecting more than 20 million people who benefit from the tax credits.
House Republicans don't want to extend the pandemic-emergency subsidies any longer; they didn't want the subsidies in the first place. In their view, the subsidies provide a backstop not to consumers but to ObamaCare itself by hiding its financial contradictions and shielding voters from the reality of the unaffordability of the Affordable Care Act. Democrats will need more and more subsidies to cover up the ocean of red ink in the ACA, and Republicans believe that extending these subsidies only delays the inevitable collapse of a badly designed system.
Just a few hours later, Trump appeared to throw in the towel. Speaking to reporters on Air Force One as the president returned to Florida for the Thanksgiving holiday, Trump declared that he'd prefer not to extend subsidies "at all" now, and might only go for a brief extension while beginning to rework the ACA instead:
President Donald Trump told reporters Tuesday that he doesn’t want to extend expiring subsidies under Obamacare, also known as the Affordable Care Act, delivering a major blow to prospects of averting sharp premium hikes next year.
“I’d rather not. Somebody said I want to extend them for two years. I don’t want to extend them for two years. I’d rather not extend them at all,” Trump told reporters on Air Force One en route to Florida when he was asked whether he plans to extend the funds.
"Rather not" does not mean "I won't." Trump conceded that some kind of extension may be necessary to deal with the impact of the expiration on those hardest hit by it, but rather than push the plan that leaked out of the White House, Trump now wants Democrats to convince him:
Still, Trump said Tuesday that “some kind of extension may be necessary to get something else done, because the unaffordable care act has been a disaster.” But he blamed Democrats for that and said, “They are negotiating with me.”
Asked which Democrats he’s talking to, Trump replied: “I can’t tell you who, but we have a lot of Democrats want this plan to happen. They would love to see the money go to the people and the people go out and get their own health care.”
In other words, Trump charged into a strategic gap that Chuck Schumer and Hakeem Jeffries left at the end of the shutdown – and then discovered that the commander had outrun his own forces. The strategy itself was sound, as it would have precluded the "Trump forced costs higher" narrative that Democrats have set up so transparently that even CNBC openly mocked Jeffries for it to his face. Trump saw the political risk in letting the subsidies expire, and assumed that risk avoidance would be his team's higher priority. Not this time; Republicans don't want to keep propping up Obama's Socialist Lite health insurance management scheme.
What comes next? The smart move would be to offer a one-year extension on Trump's terms, which would punt ObamaCare to after the midterms and allow Republicans to craft an alternative to the ACA. They could use reconciliation to do that next year, while they still control Congress, after having had 15 years to develop a comprehensive health-care reform system that will rely on market-based mechanisms. However, Trump likely has the measure of his own caucus and their predilection for risk avoidance.
Earlier this week, after the leak of Trump's ACA plan, I spoke with Phil Kerpen of American Commitment about the extensions and the effects of the subsidies. We both see a way out of the trap, but Republicans have to want to be freed from it first.
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