Right, so Donald Trump is being sued by nearly two dozen states over his decision to end health-insurance subsidies under Obamacare.
Just to be clear, that decision wasn’t just cruel, it was political suicide. The move came just a day after he signed a healthcare executive order, itself designed to undermine the ACA.
Trump’s entire raison d’être has now seemingly been reduced to destroying Barack Obama’s legacy. This week, he took his boldest steps yet in that direction, first taking aim at the ACA and then, on Friday, at the Iran nuclear deal.
When it comes to health care, “he’ll admit” he “couldn’t get there” with Congress, so he had no choice but to “move on [it] like a b*tch“, only in this case he skipped the furniture shopping and went straight to the pussy grabbing, first with an executive order and then with the subsidies gamble.
And make no mistake, that’s exactly what this is – a gamble. Trump is getting rid of payments that helped insurers cover lower deductibles and out-of-pocket costs for lower-income Americans. Of course he’s not spinning it that way. He’s calling it an effort to end “massive subsidy payments to Democrats’ pet insurance companies”:
But the ultimate irony is that this actually doesn’t accomplish anything. Here’s the Washington Post to explain:
When the reimbursements — worth roughly $10 billion next year — to health insurers go away, the actual health plans with lowered out-of-pocket costs for lower-income people won’t. Insurers will still have to offer those plans with lower deductibles and co-pays to people who make up to 250 percent of the federal poverty level —$60,750 for a family of four in 2017.
To make up the difference, insurers will raise premiums. Many already factored this into their rate increases for next year. But as the premiums increase, so do the premium tax credits — the federal subsidies that help people afford their health insurance.
Tax credits are pegged to income, so that people pay only a certain percentage of their income for their premiums, while the federal government pays the rest. That means people who benefit from cost-sharing reductions today will get bigger federal tax credits to pay for their monthly insurance costs, once those subsidies end.
According to the Urban Institute, Trump’s decision is actually going to end up costing the government an extra $7.2 billion next year thanks to the fact that now, it will have to spend more in premium subsidies to cover the higher rates. Here’s USA Today:
It’s really just a different pool of federal funds that covers the higher rates. The subsidies people who earn less than $98,400 for a family of four receive to lower the cost of silver-level plans on the exchanges are pegged to the premium rates. That means as the rates rise, so do the credits, according to health policy analysts including Levitt and the Urban Institute.
The lost subsidies to insurers means the federal government would spend 18% more on premium subsidies for insurance customers than it would have spent on tax credits and cost-sharing subsidies combined, according to the Urban Institute. That would be another $7.2 billion in 2018, the Urban Institute said.
That means stopping the subsidies to insurers will actually cost the federal government money, not save it.
Don’t take it from them, ask Jefferies. “The premiums are going to go up, the premium subsidies go up. They’re just paying out of their left pocket instead of their right pocket,” David Windley, managing director at the bank says, adding that Trump is just “cutting off [his] nose to spite [his] face.”
And see that’s the point. This has nothing to do with saving anyone any money. This is actually the worst case scenario for taxpayers. It’s going to cause premiums to rise, which will then cause the government to pay more in subsidies, and you know, the government is funded with taxes which Trump wants to cut, so around we go in an endless loop of presidential insanity.
But Trump doesn’t care about any of that. No, he’d rather brag about the extent to which he’s creating chaos in the market. Think that’s an unfair assessment? Think again, because here he is doing just that on Saturday morning:
He is actually excited about this, although again, he is raising premiums and thereby increasing costs for the government.
Apparently, insurers in most states went ahead and assumed Trump would do this and so, in anticipation, factored that in when they submitted their rates for 2018. But according to David Anderson of Duke University’s Margolis Center for Health Policy insurers, insurers in 14 states didn’t.
“Insurers that haven’t built the loss of the subsidy payments into their premiums will likely scream bloody murder, and try to get permission to raise premiums or potentially exit the marketplace,” Larry Levitt, senior vice president of the Kaiser Family Foundation told USA Today, adding that “with open enrollment starting November 1, there could be quite a bit of chaos over the next few weeks.”
This is a complete disaster. And as noted here at the outset, mutliple states are suing Trump over the move.
As if all of that weren’t bad enough, he’s now added one of the most contentious issues in all of American politics to the list of factors that could lead to a government shutdown later this year.
It’s conceivable that Trump could even try to use the subsidies as a blackmail device to build that damn border wall. For her part, Pelosi says she won’t allow it. “The president [can’t] negotiate the good health of the American people to get a wall,” she told reporters on Friday, adding that “no, that is not going to work.”
Just so none of this is lost on you, allow us to drive it home. Trump is now trying to simultaneously push through a tax cut for the wealthy that would personally save him $1 billion, while ending subsidies designed to keep health care costs down for low income Americans, and by ending those subsidies he’s driving up premiums and costing the government billions of dollars at a time when his proposed tax cut is already set to expand the deficit!
Read that again and let it sink in, because it is the very definition of egregious and flies completely in the face of his promise to govern in the interests of working class Americans.
The sheer audacity of this is so mind-boggling that there are literally no words to describe it. Oh wait, that’s not true. There is one word that captures it: “Bigly.”