The Trump administration will end payments made under the Affordable Care Act, or ACA, that help eligible low- and moderate-income Americans cover their out-of-pocket costs for prescription drugs and doctor visits, the White House confirmed in a late-night statement Oct. 12.
The disclosure about the cost-sharing reduction payments, or CSRs, came the same day that President Donald Trump signed an executive order aimed at unraveling portions of the ACA.
The Congressional Budget Office, or CBO, and insurance groups have warned that without the CSRs, healthcare insurance premiums would rise by 20% in 2018 for many Americans who get their coverage through the ACA marketplace.
The CBO's analysis also said ending the payments would increase the U.S. deficit by $194 billion over the next decade.
The payments, which the Trump administration had been making on a month-by-month basis, covered deductibles and copayments for about 7 million low- and moderate-income Americans.
Insurers are required to offer cost-sharing reductions to eligible Americans enrolled in the ACA plans, and then the U.S. Department of Health and Human Services, or HHS, reimburses the companies.
Trump had threatened throughout his presidency to end the payments, which were the subject of a federal lawsuit brought by the Republican-led House against the Obama administration.
The Obama administration had appealed in the case, but Trump has placed the appeal on hold.
HHS Acting Secretary Eric Hargan and Centers for Medicare and Medicaid Services Administrator Seema Verma said that after legal review, "we believe that the last administration overstepped the legal boundaries drawn by our Constitution.
"Congress has not appropriated money for CSRs, and we will discontinue these payments immediately."
The White House said that based on the Justice Department's analysis, the "government cannot lawfully make the cost-sharing reduction payments," repeating Trump's often-used claim that the funds were a "bailout of insurance companies."
In May, a coalition of 18 attorneys general, including New York Attorney General Eric Schneiderman and California Attorney General Xavier Becerra, moved to intervene in the federal lawsuit — a request that was granted by the U.S. Court of Appeals for the District of Columbia Circuit.
In an Oct. 12 statement, Schneiderman said the coalition "stands ready to sue" Trump for cutting off the payments.
"Sadly, instead of working to lower health costs for Americans, it seems President Trump will singlehandedly hike Americans' health premiums," Senate Minority Leader Chuck Schumer, D-N.Y., and House Minority Leader Nancy Pelosi, D-Calif., said in a joint statement. "It is a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America. Make no mistake about it, Trump will try to blame the Affordable Care Act, but this will fall on his back and he will pay the price for it."
Some lawmakers, including Sen. Lamar Alexander, R-Tenn., have proposed taking the CSRs out of Trump's hands and bringing the funds under Congress' control.