Megan McArdle:
Executive orders allowed the past administration to keep the program alive. They allow this administration to destroy it. Like his predecessor, President Donald Trump has been frustrated by lack of action in Congress on Obamacare. Like his predecessor, he has resorted to executive fiat to get around that obstruction. Only instead of frantically trying to save the troubled program, he is yanking out the life-support cords installed by President Barack Obama.
This week saw two executive actions. With the first, Trump is trying to expand health insurance options outside of the Obamacare exchange for individual insurance plans (which will have the side effect of making on-exchange policies less attractive to healthy customers).
The second is even more serious: After threatening it for months, the president has finally ended the cost-sharing reduction payments to insurers, which subsidize the provision of special policies with lower out-of-pocket expenses for people who make less than 250 percent of the federal poverty line. At the very least, this will probably mean a further increase in premiums, and growing instability in at least the parts of the individual market that aren’t eligible for subsidies to offset the increase. At worst, especially if it gets bogged down in lawsuits, it may cause insurers to say “enough is enough,” leaving broad areas of the country without any firm willing to sell individual policies through the Obamacare exchanges.
While the Congressional Budget Office has issued a delightfully counterintuitive forecast that ending the subsidies could actually increase insurance coverage, there’s little question in my mind that these policies are bad for the exchanges. 1 At the very least, I think we can all agree that they put the exchanges at greater risk. There is also little question that this is at least part of the reason that the administration is pursuing them. And yet, believe it or not, there are still arguments for both.
It has become evident that millions of uninsured Americans are uninterested in buying insurance on the exchanges, because it’s too expensive, or the “narrow networks” don’t cover enough doctors and hospitals. The new options the administration aims to create could be a genuine boon to those people. If you have spent years bemoaning the dire fate of the uninsured, you have to take that benefit seriously.
As for ending the subsidies … what am I, some sort of monster? Do I just hate the poor so much that I can’t stand to see them getting help paying for health care? Well, no. I have no particular objection to the payments as policy. Except for one small thing, which is that they seem to be sort of illegal...
