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On their way to killing Obamacare, Republicans are leaning toward funding up to $9 billion in health care subsidies this year to keep the program afloat — even though they sued the Obama administration to stop those exact payments.
The move is the most significant sign yet that the GOP is serious about propping up Obamacare temporarily to provide a smooth transition to a yet-to-be disclosed Republican replacement.
The irony is deep: Republicans have never voluntarily funded an Obamacare program. This particular subsidy, which covers out-of-pocket health care costs for low-income participants, has been a GOP target since 2014 when House Republicans went to court to argue the White House funded it unconstitutionally. Republicans were exultant last May when the Federal District Court for the District of Columbia ruled in their favor, even though the payments were allowed to continue pending an appeal.
Now, though, several Republican sources say they will have no choice but to appropriate the money. With President-elect Donald Trump and top lawmakers vowing a smooth transition to a new plan, they can't blow up Obamacare until they enact a replacement.
Energy and Commerce Chairman Greg Walden (R-Ore.) wants to see the program funded “one way or another," he told POLITICO. “If you don’t, the plans have the ability to cancel midyear, and we said we wouldn’t pull the rug out from under people — and we shouldn’t.”
The court case centers on cost-sharing subsidies that help certain low income people with out-of-pocket medical costs, such as doctors' co-pays — not the separate premium subsidies that are helping millions of people, including some middle-class families, purchase insurance through Obamacare.
If Republicans were to stop the payments, they would risk owning the very sudden and likely collapse of the Obamacare exchange markets. That’s because insurers would still be on the hook for the payments under the law, and would likely flee the markets almost immediately to avoid paying out billions.
Cutting off the money midyear “would be disastrous” for the state’s insurance market and those covered by it, Utah Gov. Gary Herbert wrote House Majority Leader Kevin McCarthy (R-Calif.) on Friday, urging Congress to fund the subsidies until year's end.
“As we work to re-craft healthcare in our country, we must be careful not to increase the rate of uninsured, particularly for our most vulnerable citizens,” Herbert wrote.
If Republicans do support the program, however, some fear they would be blamed for “bailing out” insurance companies. One idea that has been floated to counter that narrative is to give the funding directly to consumers rather than to insurance companies.
“What they say is, we’re only doing this because they can’t change the law quickly enough,” said Tom Miller, a health care policy expert at the American Enterprise Institute.
Several Republican sources stressed that no final decisions have been made, but they will have to come soon: The court allowed the subsidies to continue while the Obama administration appealed the decision. The Trump administration must inform the Court of Appeals for the D.C. Circuit by Feb. 21 whether it will continue that appeal. If it should stand down, the payments could end almost immediately and Congress would have to be prepared to make a decision.
Republican conversations around how to deal with the fallout of the House v. Burwell lawsuit include how the subsidy program would be funded — whether in an appropriations bill or in one of the Obamacare repeal and replacement bills— and whether the entirety of the $9 billion program would be replaced.
“While we build replacements, we want the 11 million Americans who now buy insurance on the exchanges to be able to continue to buy private insurance,” Lamar Alexander (R-Tenn.) said on the Senate floor. “Among the actions that will help are to … approve the temporary continuation of cost-sharing subsidies for deductibles and co-pays.”
Not everyone is on board with the argument that Republicans should continue the subsidy through an appropriation.݅
Rep. Tom Cole (R-Okla.), chairman of the House Labor and Health and Human Services appropriations subcommittee, said the GOP isn’t responsible for funding the mistakes Democrats made while writing Obamacare.
“You can’t [fund the program] unless you’re going to increase the allocation to the committee,” he told POLITICO, referring to the overall limits on health spending his committee must work with. If the House has to fund the program, other health care programs would have to be cut to pay for it.
“I don’t know that we're particularly obligated to pay for the mistakes that the Obama administration made that violated the law,” he said.
But even Cole said he wants to see a smooth transition and doesn’t want to see benefits dropped suddenly.
Insurance companies have a huge stake in the program. The cost-sharing payments are made to insurers, who must use them to defray consumers' out-of-pocket costs. The companies added language to their contracts for 2017 that allows them to leave the market is the payments are ended, although they have not said that they would definitely drop coverage immediately.
Besides its strategy on Obamacare, the House has long-term constitutional concerns in the case.
For the first time, a federal district court said the legislature could sue the White House over appropriations disputes. The House wants to ensure that ruling stands, according to senior Republican aides. They’re likely to lose on that point if the Trump administration moves ahead with the Obama administration’s appeal, according to court-watchers.
“The D.C. Circuit [Court of Appeals] consists of a majority of judges appointed by Democratic presidents,” said Nicholas Bagley, a University of Michigan Law School professor who argues the House doesn’t have the right to sue. “I think this is not a long-term winner for them.”
That means the House has a strong incentive to encourage the Trump administration to drop the appeal, even if that means a future White House could be sued by the House of Representatives.
“We’re working through the mechanics on it because we also want to preserve the court victory,” Walden said. “Regardless of who is in power, if you get to the point where a president can spend whatever he or she wants without any check and balance from the Congress, you don’t have these branches anymore.”
The first decision will come from the new Trump administration Justice Department. While several Republican sources expect Trump’s DOJ to drop the appeal, the president-elect’s transition team has not tipped its hand. A Trump spokesman declined to comment on the case because it involves the current White House.
“Upon taking office, the Trump administration will evaluate this case and all related aspects of the Affordable Care Act,” the spokesman said.
Rachael Bade and Rachana Pradhan contributed to this report.