Trump reportedly wants to go nuclear on Obamacare.

Trump Reportedly Wants to Blow Up Obamacare, for Real This Time

Trump Reportedly Wants to Blow Up Obamacare, for Real This Time

Moneybox
A blog about business and economics.
May 19 2017 6:05 PM

Trump Reportedly Wants to Blow Up Obamacare, for Real This Time

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Rage. Rage!

Photo by JIM WATSON/AFP/Getty Images

It appears our president is ready to move on from hostage-taking to hostage-shooting.

Jordan Weissmann Jordan Weissmann

Jordan Weissmann is Slate’s senior business and economics correspondent.

According to Politico, President Trump told his staff this week that he wants to cut off a crucial set of subsidies that are paid to health insurers under Obamacare, a move that could potentially bring about the collapse of the law's coverage marketplaces. Trump has previously told reporters that he might halt the flow of funds if Democrats refused to negotiate a new health care bill, and the administration has generally sent mixed messages about its plans, which has caused a great deal of fear and confusion among insurers.

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Many of Trump's advisors, including Secretary of Health and Human Services Tom Price, apparently oppose the plan, because they “worry it will backfire politically if people lose their insurance or see huge premium spikes and blame the White House.” Which is a reasonable fear. Americans tend to blame their president for their personal misfortunes, particularly when they can easily trace them back to the discrete, rash actions of the man in the Oval Office.

Ending the subsidies, which are known as cost-sharing reduction payments, has widely been viewed as the easiest way that Trump could wreck Obamacare's delicate insurance markets—it's often described as the administration's nuclear option. Insurers receive the payments in return for keeping out-of-pocket costs like co-pays and deductibles low for their poorer customers, and experts generally assume that many carriers would simply bail on the exchanges if the flow of money stopped, causing them to topple. Trump is in a position to hit the kill switch now because House Republicans sued to stop the subsidies several years ago, arguing that funding for them had never been properly appropriated. A federal trial court judge ruled in their favor, and the White House has to tell an appeals court by Monday whether it will continue appealing the case.

Trump's previous hamfisted attempts to treat the CSRs as a bargaining chip have gone nowhere, as Democrats have refused to negotiate over them. It's not hard to figure out why. If Trump ends the CSRs, it could cause millions to lose their health insurance. But so will any Obamacare repeal bill passed by a Republican Congress, even with a few token bipartisan votes. In the first scenario, Democrats could blame Trump. In the second, they'd be culpable for the fallout from any compromise legislation.

It's particularly unclear what Trump stands to gain now by finally axing the subsidies now. Democrats still have no reason to budge on Obamacare repeal. Congressional Republicans aren't particularly interested working across the aisle; the House has already passed a bill on partisan lines, after all. Meanwhile, the exchanges in some states, like Iowa, are already in a precarious place (thanks in small part to Trump's rhetoric), which has been enough for him to go on TV and claim that the entire law is failing. Pushing the the entire market off its ledge only invites voters to blame Trump himself for the wreckage.

Even if you just think about it in mob-movie terms, it doesn't make much sense. What villain ever got paid after they killed their hostage?

Rational analysis has never been our president's strong suit, though. Trump may be convinced that Democrats still “own” Obamacare and will be blamed if it finally fails, even if cable channels suggest he's at fault. I am still assuming that somebody will talk Trump out of leveling the entire individual health insurance market in a misbegotten effort to win political leverage over his opposition. But who can really be sure?