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Government & Politics

The Health Care Catch 22

Trump faces an impossible choice: Cut off illegal subsidies for insurance companies or face market disaster.

Lewis Morris · May 24, 2017

The ObamaCare health insurance exchanges are teetering on the brink of collapse as the Trump administration tries to decide whether and how to continue subsidy payments to insurance providers.

You may remember how the House of Representatives brought a lawsuit against the Obama administration over Barack Obama’s continued subsidy payouts to the insurance industry to stem rising premiums. The payouts were illegal, having not been authorized by Congress or allocated as part of the original ObamaCare law. Of course, that didn’t stop the former president from doing everything beyond his power to keep his signature law afloat.

When Donald Trump came into office, he vowed to end the payouts. This was part of his larger plan to repeal ObamaCare and replace it with a better health care law. That better law has yet to materialize, but the problem of the insurance payouts remains.

Without the continued, and illegal, government largesse, health insurance companies are claiming that they will either have to leave the exchanges entirely or significantly jack up premiums for 2018. Either move will send the health insurance market into a tailspin. Whatever decision is made, American consumers will be left holding the bag.

Clearly, then, the Trump administration is hard pressed to make a decision. Put taxpayers on the hook for continuing the subsidies and quietly endorse Obama’s actions and his failed law, or cancel the subsidies and watch premiums skyrocket even further. So far, Trump has done neither, opting to buy time by requesting that the federal courts hold off on their final judgment for another 90 days.

This would leave the ObamaCare marketplaces in limbo until August, allowing Democrats time to find a way to pin the law’s ultimate failure on Republicans while insurance companies continue to extort the federal government.

It’s hard to find sympathy for the insurance companies in this matter. They claim a need for certainty on the payments to continue going forward in the exchanges in 2018, yet they didn’t have certainty going into 2017. With the House lawsuit, Obama’s leaving office, and no guidance from either of his potential replacements on the campaign trail in 2016, there was no way for the insurance providers to know that they would continue to receive the payouts. Perhaps they were gambling that Hillary Clinton would win the election and continue milking the American taxpayer like her predecessor. Worse, perhaps the insurance industry colluded to blackmail the incoming president into continuing the payments so they could maintain the status quo.

It would be worthwhile for the Justice Department and the Securities and Exchange Commission to take a closer look at the 2017 insurance premium submissions to see if the insurance companies had a contingency plan in mind regarding the cost-sharing subsidies. To not have an alternate plan in place smacks of either incompetence and gross negligence or a concerted effort to blackmail the federal government into keeping the spigot running.

This may seem like a chaotic situation, but it was predicted years ago. The Democrats, by design, created a law that would eventually force the government to completely take over health care and lead to a single-payer system. ObamaCare was never going to insure everyone and keep premiums low at the same time; the insurance market just doesn’t work that way. The only way everyone could be covered was if the market was blown up and the government stepped in and took over wholesale.

Whatever the outcome, the Trump administration and the GOP Congress probably shouldn’t count on this episode working out for them politically. Sure, nobody likes ObamaCare, and it has failed continuously and completely to live up to its expectations. But Trump and the Republicans will be the ones who pay the price if it collapses on their watch.

That isn’t fair considering the law was passed without a single GOP vote, and given that Republicans have sought to repeal and replace it since it was passed. But Trump’s other mounting political problems have drained his already meager political capital. His popularity is low. And the news media is in the tank for the Democrats, so they’ll push whatever narrative Chuck Schumer and Nancy Pelosi desire.

If Trump continues the subsidies unilaterally, he will lose his populist edge with his supporters. If he turns off the spigot, he’ll be blamed for rising premiums and hammered for leaving people dying in the streets without insurance. It’s a catch-22.

Well played, Democrats. Well played.

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