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Trump administration ending ACA cost-sharing subsidies

By Sara Shayanian
Trump administration ending ACA cost-sharing subsidies
President Donald Trump's Department of Health and Human Services announced Thursday it will end cost-sharing payments, or subsidies, to help Americans afford medical coverage through the Affordable Care Act. Photo by Mike Theiler/UPI | License Photo

Oct. 13 (UPI) -- The Trump administration will end federal subsidies that have been available for years to help Americans purchase insurance coverage through the Affordable Care Act, as part of his efforts to dismantle the Obama-era health law.

The decision was announced late Thursday by the Department of Health and Human Services, and is an effort in new administration plans to uphold a promise by President Donald Trump to get rid of the ACA -- a move that Congress has failed to deliver on this year.

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Although the HHS continued to make cost-sharing reduction (CSR) payments worth an estimated $7 billion to insurers as part of the law, Trump had previously threatened to end the subsidies -- which help millions of Americans afford heath coverage through federal exchanges.

"After a thorough legal review by HHS, Treasury, [Budget Office], and an opinion from the Attorney General, we believe that the [Obama] administration overstepped the legal boundaries drawn by our Constitution," a statement by Health and Human Services said late Thursday. "Congress has not appropriated money for CSRs, and we will discontinue these payments immediately."

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Calling the ACA a "bad policy" and a "bad law", the statement notes that the Obama White House never received an appropriation from Congress, as legally required for the subsidies. A legal opinion by Attorney General Jeff Sessions solidified the opinion to cut out the subsidies.

The House of Representatives attempted in 2014 to sue to stop the cost-sharing subsidies, and last year a federal court ruled that the Obama administration had circumvented the appropriations process and unlawfully used federal money to fund reimbursements to insurers.

In a joint statement, Senate Minority Leader Chuck Schumer and House Minority Leader Nancy Pelosi called the decision, "a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America."

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Cutting off cost-saving reductions could create even greater instability in the ACA marketplace. The Congressional Budget Office noted in August that up to 1 million people could be uninsured by next year as a result of the move.

According to current White House data, nearly 7 million Americans chose to pay ACA penalties last year for failing to buy coverage required by the individual mandate -- and current exchange enrollment is 60 percent below what the CBO first estimated when the law took effect in 2010.

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Thursday's announcement came just hours after Trump signed an executive order to loosen ACA "association" restrictions on insurance plans, which could also help to destabilize the law.

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