Well, he finally went there.
In an interview published Wednesday by the Wall Street Journal, Donald Trump effectively threatened to sabatoge the entire individual health insurance market if Democrats refused to negotiate with him over an Obamacare replacement. The president said he was debating whether to continue making crucial payments to insurers that help keep down the cost of coverage for low-income customers. House Republicans have sued to cut off the “cost-sharing reductions” subsidies; if Trump stops defending the case and halts the funding, the Affordable Care Act’s insurance exchanges could well collapse.
“I don’t want people to get hurt,” Trump told the Journal’s reporters. “What I think should happen—and will happen—is the Democrats will start calling me and negotiating.” Welcome to the Tony Soprano school of health policymaking.
So, how did we get here? For a long answer, check out my piece on the cost-sharing reductions from two weeks ago. The shorter version is this: Under the Affordable Care Act, insurers are required to offer health plans that limit out-of-pocket expenses like co-pays and deductibles for poorer enrollees. In return, the federal government pays them directly to cover the extra cost. Without that money, carriers would be on the hook for billions. The problem is that congressional Republicans, in an attempt to sabatoge Obamacare, refused to appropriate funding for the subsidies. The Obama administration went ahead and distributed them anyway, arguing the payments were authorized elsewhere in the health care law, and the GOP sued to stop them. While the last administration may have had a surprisingly strong legal position, a district court judge ruled in favor of the House GOP, and the suit went up on appeal, where it's now sitting.
The key thing to realize is that, if the cost-sharing reduction payments disappear, insurers are almost surely going to pull out of the market. The law would require them to offer underpriced plans without any compensation from Washington. They could theoretically sue for their money in the Court of Federal Claims, but that route could take years, and it’s unclear how many of them would have an appetite to burn cash during an extended court battle.
Earlier this week, the New York Times reported that the administration was “willing to continue” the payments this year to keep the market stable. But then the Department of Health and Human Services released an unusually tart and politically tinged statement suggesting that no such decision had been made. “We have not been contacted by Democrats to help save Obamacare, perhaps because they consider Obamacare to be a losing cause. Democrats need to help solve this failed Obamacare plan,” it read. According to Politico, the statement “was personally ordered by an incensed Trump, who feared that the Times story hurt his negotiating position.”
So now we’ve devolved into a hostage situation. Trump, for his part, is barely keeping up the ruse that this is about legal authority. On the one hand, he told the Journal reporters that Obama “wasn’t allowed” to make the payments. But then he refused to say definitively whether he’d make the payments. Instead, he lashed out at the Democrats. “Schumer should be calling me up and begging me to help him save Obamacare,” Trump told the Journal. “He should be calling me and begging me to help him save Obamacare, along with Nancy Pelosi.”
Then, he more or less owned up to the political nature of the whole gambit.
Mr. Trump said Democrats should be motivated to find negotiate on health care because “they own Obamacare.”
Still, he acknowledged that dynamic is quickly shifting.
“That’s part of the reason that I may go the other way” on the insurance payments, he said. “The longer I’m behind this desk and you have Obamacare, the more I would own it.”
Trump is sort sabatoging himself rhetorically here. By admitting he might “go the other way” if he thinks people will blame him for the health care market’s collapse, he’s pretty much acknowledging that the whole thing in his hand. That entirely undercuts the administration’s official line that Obamacare is merely about to fail on its own. He’s totally giving up the plot. Not that the game made much sense to begin with. After all, the only reason we’ve reached this point is that Republicans refused to allocate money for part of the program, then sued to stop the payments, which insurers may still actually be entitled to.
The president is also sort of undercutting his whole bluff by saying he might make the payments in the end. I mean, don’t start a game of chicken by admitting that, yeah, you’re kind of thinking about swerving.
But that also might not matter. Insurers need some certainty by this summer, when they have to start submitting rate increase requests for 2018. If Trump is still threatening to blow the whole market by then, they might just start to flee no matter how weak and unbelievable his mafioso impression might be.