NEW YORK (CNNMoney) — President Trump and House Speaker Paul Ryan say that Obamacare is on the verge of collapse.
There’s one thing they can do that will likely drive a stake through its heart — refuse to fund the law’s cost-sharing subsidies.
These payments to insurance companies reduce the deductibles and co-pays for more than 7 million low-income people on the Obamacare exchanges. That’s more than half of those who signed up for 2017.
The subsidies were at the center of a court battle between House Republicans and the Obama administration. A district court judge last year ruled that the subsidies were illegal and must stop. However, she stayed her decision while the Obama administration appealed.
Now that the White House has changed hands, House GOP lawmakers are in the uncomfortable situation of suing Health Secretary Tom Price. At a court hearing last month, both parties asked to have more time to come to a resolution.
The subsidies continue to be paid this year, but insurers want to know whether lawmakers intend to fund them for 2018. If they don’t, many, if not all, carriers would likely drop out of the exchanges next year.
“Cost-sharing reductions help millions of Americans get the care and coverage they need,” America’s Health Insurance Plans, a main industry group, said in a statement last month. “They are a critical part of ensuring short-term stability of the market.”
Until last week, it was widely expected that the Republicans would agree to pay the subsidies, which are expected to cost $9 billion this year and $11 billion next year, in order to have a smooth transition to a GOP health plan. But now that the House has shelved the bill, the future is more uncertain.
The Republicans believe that letting Obamacare fail will force Democrats to come to the table to negotiate changes to the law. This could prompt lawmakers to withhold funding to spark an exodus of insurers.
However, that is a risky strategy because it could leave millions of lawmakers’ constituents uninsured. Some 12.2 million people signed up for Obamacare this year.
The House doesn’t have much time to decide. Insurers only have a few more weeks to determine whether they’ll participate in 2018. Already, Humana has said it is pulling out, and several others are on the fence, waiting to see what the Trump administration and Congress will do.
“We’re working with the Trump administration and evaluating the options in front of us,” said AshLee Strong, a Ryan spokeswoman.