President Donald Trump’s elimination of subsidies to help lower income Americans afford health care is illegal and just plain mean. The result is that millions of people may lose their health care coverage, but with no savings in cost to the federal government. This is simply an attempt by the president to accomplish by executive fiat what he could not do through Congress: the gutting of Obamacare.
The Patient Protection and Affordable Care Act sought to provide health insurance for virtually all Americans. Those who do not receive it through their employers can purchase insurance that provides essential benefits. The act provides a subsidy to assist those with incomes between 100 percent and 400 percent of the federal poverty line to afford the premiums. The Trump order does not change these subsidies.
Also, those with incomes between 100 percent and 250 percent of the of poverty line are able to receive additional subsidies to help fund co-pays and deductibles. These are called “cost sharing reductions,” and these are the subsidies that Trump eliminated. These subsidies are particularly important because the insurance plans purchased by lower income individuals often have high deductibles. It is estimated that 3 million people nationally and 700,000 Californians benefit from these “cost sharing reductions.”
Many insurance companies likely will simply stop selling health insurance to these individuals, knowing that they will not be able to afford the co-pays and deductibles without the subsidies. For those that do continue to sell insurance, premiums will increase. An insurance industry study indicates that insurance premiums will go up in these markets, likely by an average of 12 to 15 percent. This, of course, will price many individuals out of being able to afford health insurance at all.
Why is the president doing this? It is not to save money for the federal government. The increase in the cost of premiums will mean that the cost of the subsidies that continue will rise. The independent Congressional Budget Office estimates that Trump’s action will increase the cost to the federal government by almost $200 billion over the next 10 years.
Trump is doing this because he pledged to repeal Obamacare and repeatedly has failed in Congress. His goal is to do as much harm as possible to this program with the hope that it will collapse. “The Democrats ObamaCare is imploding,” he tweeted last week. “Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”
But if Obamacare is “imploding,” it is just because Trump is trying to destroy it. The president’s blatant partisan politics is at the expense of the large number of people who benefited from Obamacare. More than 20 million additional people have health insurance because of it and all of us gained because it decreased the rise in health insurance costs.
California has filed a lawsuit arguing Trump’s action is illegal. At the very least, he did not follow the procedures required for significant changes in policy. This was the same basis conservatives used to stop President Barack Obama’s immigration program, Deferred Action for Parents of Americans.
Additionally, there is a strong argument that Congress has mandated these subsidies and only Congress can change this; the president cannot unilaterally alter or refuse to comply with a federal spending law.
In fact, whether Congress has properly appropriated funds for this is an issue now pending before the federal court of appeals in Washington, D.C. Assuming it concludes that Congress has approved the spending for these programs, Trump cannot refuse to spend appropriated funds.
For Trump, and perhaps for many in Congress, the issue of subsidies for deductibles and co-payments is likely an intellectual and political exercise. But for those who won’t be able to get health care once the subsidies end, it may be a matter of life and death.
There is no reason for the president to end these subsidies other than to advance his political agenda. The courts should rule in favor of California’s suit and protect the subsidies and the many who rely on them.
Erwin Chemerinsky is dean and professor of law at the UC Berkeley School of Law. He can be reached at email@example.com.