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Will Trump let Obamacare collapse?

Obamacare's future

On the day the House Republican leadership pulled the plug on its plan to replace Obamacare, President Trump initially responded by saying that the best political move might be to just step back and let the law “explode.”

“It is exploding right now,” he said.

The coming weeks will reveal just how much the president is willing to step forward and nudge the law into collapse. While health care experts disagree on how fragile the Affordable Care Act is on its own, they agree that Mr. Trump has the power to hasten its demise.

“There are states where the insurance market is fragile right now and in need of some repair, but if the Trump administration creates uncertainty or takes steps to undermine the law, that could leave large swaths of the country without insurance available,” said Larry Levitt, a senior adviser at the Kaiser Family Foundation.

Or, as health insurance industry expert Bob Laszewski put it: Republicans “have to decide right now if they’re going to stabilize this market or they’re going to contribute to its blowing up -- because they can do both right now.”

The Trump administration could cripple the seven-year-old law if it decides to cut off the cost-sharing reduction payments -- subsidies the government gives insurance companies to help them comply with a legal mandate to lower out-of-pocket costs for consumers earning between 100 and 250 percent of the poverty line. The subsidies make insurance more affordable for poorer consumers, and they’re a major part of the insurance industry’s bottom line: the federal government paid insurance companies $7 billion last year.

Without those payments, insurance companies could raise rates across the board, making insurance unaffordable for many more people. The Kaiser Family Foundation estimated that the average premium on a benchmark silver plan would increase 19 percent as insurers struggle to make up for lost revenue from the cost-sharing payments.

In an interview with the Wall Street Journal last week, Trump floated the idea that he might end the payments.

“If Congress doesn’t approve [the payments], or if I don’t approve it, that would mean that Obamacare doesn’t have enough money so it dies immediately as opposed to over a period of time.  Even if it got that money, it dies, but it dies over a period of time,” the president said, adding that he’s “not sure” whether lawmakers will appropriate the necessary funds.

But Mr. Trump then seemed to indicate that he would ultimately leave the matter up to Congress. 

“If they approve it, then I will have to approve it,” he said. “Otherwise, those payments don’t get made and Obamacare is gone, just gone.” 

In 2014, the GOP-led Congress sued the Obama administration over the insurer subsidies, arguing they were unconstitutional because the House hadn’t formally appropriated the money. A judge ruled in their favor, but allowed the cost-sharing payments to continue while the Obama administration appealed the decision to a higher court. Mr. Trump’s administration has not yet indicated how they will proceed.

If President Trump does leave the future of cost-sharing payments to Congress, he could saddle Republicans with the messy work of precipitating the law’s collapse.

“For people who buy insurance on their own, a collapse of the market could mean that they literally have no insurance options available, no way of getting coverage, and no access to the tax credits that help them pay their premium through the Affordable Care Act,” Levitt said. “We could easily see millions of people losing insurance and there would no doubt be all kinds of finger pointing about who is to blame. That would be a crisis that the White House would need to deal with.”

Levitt believes the law is fundamentally stable across most of the country with a few exceptions – Tennessee, Georgia, Arizona, North Carolina and Nebraska – where the marketplaces were struggling.

“There are fragile markets around country but by and large the insurance market is stable under the Affordable Care Act,” he said. “There’s really no sign that Obamacare is exploding on its own.”

Laszewski takes a more critical view of the law’s success. He said the law has worked well for those who benefitted from the Medicaid expansion, covering low-income people making up to 150 percent of the poverty line -- Americans who likely would not have otherwise had coverage. But those earning more than that struggled with high premiums and deductibles, primarily because there weren’t enough eligible people signing up.

“The biggest reason that Donald Trump can destroy this with a couple of different decisions is because it is already unstable. If this were stable, he wouldn’t be able to destroy it between now and the fall when the rates come out; it would be able to withstand anything he could do to it administratively,” Laszewski said.

Insurers will need to decide in the coming months whether they will participate in the exchanges when enrollment opens in the fall. Before they do, however, they will need to know whether the Trump administration will keep the law running smoothly by making the cost-sharing payments, encouraging enrollment, and enforcing the individual mandate that forces people to buy insurance or pay a penalty – all things Mr. Trump has suggested he would not do.

But that power is the reason Republicans must figure out what they’re going to do -- soon, argued Laszewski.

“They won the election; this is in very tough shape. And it’s theirs to fix,” he said. “So the notion that they’re just going to sit back and let it explode, and millions of people are going to get hurt is not acceptable. They can’t walk away from this.”

CBS News’ Chip Reid contributed to this story.

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