Health Reform

Trump to hit the poorest by ending Obamacare subsidies

Donald Trump

The president to cancel aids that allow paying less, which can increase the prices of the policies. Donald Trump has given a near-death blow to Obamacare, the health care bill prompted by Barack Obama and anathema to many Republicans. The US president has decided to end subsidies that are key to the operation of the law. The White House announced late on Thursday that it has no funding for aid it grants to insurers so low-income people pay less health care costs, such as copayments. A few hours earlier, Trump had signed a decree to encourage policies with fewer requirements.

The Republicans had brought those aids to court, which had partially given them the reason but the case is pending judgment in an appellate court. “The rescue of insurers through these illegal payments is another example of how the previous administration abused taxpayer dollars and dodged the law to support a broken system”, the government said in a statement. “Congress must repeal and replace Obamacare’s disastrous law and provide real relief to the American people”.

Trump’s message is clear: in the face of Congress’s inaction to approve a health counter-reform, he has decided to act on its own and if legislators want to prevent it they must get down to business. It is a similar strategy to the one that has been adopted regarding the program that prevents the deportation of the dreamers, the undocumented immigrants who arrived from small to the US. If Congress – in which its party, the Republican, holds the majority – does not act, that program will be canceled.

Political vicissitudes aside, the decision on Obamacare will have devastating effects, especially for low-income people: experts agree that ending subsidies will increase the monthly cost of policies and may lead insurers out of the market. That is to say, markets are likely to be added to the chaos when Trump rightly claims that they already are and that he wants to reverse it. And the announcement comes at a very delicate time, with three weeks to open the regular period to buy health insurance for next year.

“Cutting health benefits will mean more uninsured people in my district”, Ileana Ros-Lehtinen, a Republican congresswoman from Florida, warned in a Twitter message. The president, she added, “promised more access and affordable coverage. This does the opposite”. However, Republican House Speaker Paul Ryan endorsed Trump’s decision to argue that it is the Congress that must decide on financial aid.

Obamacare, passed in 2010, is a very complex law. No one questions that it does not have inefficiencies. But the conclusion varies between parties. For Democrats, the important thing is that the law has covered 20 million people who did not have coverage and has established requirements that prevent abuse, such as denying coverage or charging more according to medical history. For Republicans, Obamacare symbolizes government interventionism and excessive welfare because it has triggered the prices of some insurance and lowered the supply.

The key of the law is that it creates a regulated market for the purchase of insurance for individuals (21.8 million, 7% of the population) who do not receive assistance through their jobs or the Government (with its public programs for very poor or retired people). Within that market, the government grants two types of subsidies to spend less on health. On the one hand, four out of five insured through Obamacare receive some kind of help that lowers the monthly cost of their policy. In parallel, people with low incomes – earning between $ 12,000 and $ 30,000 annually – receive other aids to pay less extra costs outside their policy, such as copayments for seeing a doctor or reducing their minimum level of spending.

The latter aid is paid by the Government to insurance companies. Last year the cost amounted to 7,000 million dollars. The subsidies can lead a person to save $ 6,000 a year, according to estimates by The Commonwealth Fund, an organization that analyzes the health market.

But payments are problematic. Republicans in the House of Representatives resorted to aid in 2014 claiming they were illegal since Congress never approved them as part of the government’s annual budget. A judge gave them the reason, but the Obama administration filed an appeal and there is no final ruling. The Trump Administration had so far kept the payments and many lawmakers and experts had asked to continue them until a definitive solution was reached. The president, however, has decided to punch the table and end them. Five states, led by California, have announced they will appeal the decision.

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