There’s no doubt about it — last week’s failure to pass the American Health Care Act was a painful setback in the fight to repeal and replace Obamacare.
But Obamacare’s critics need not give up. There are plenty of executive actions the Trump administration could take to roll back the Affordable Care Act. First among them should be refusing to fund Obamacare’s "cost-sharing reduction" subsidies — federal dollars that reimburse insurance companies for covering many of the out-of-pocket costs of low-income exchange enrollees.
These reimbursements are expensive — some $7 billion a year. But they’re also illegal.
The Republican-controlled House sued the Obama administration last year to block distribution of the subsidies. Congress had never appropriated funding for the program. So the GOP leadership argued that the Obama administration infringed on the legislative branch’s constitutional "power of the purse" when it disbursed funding for the subsidies anyway.
The U.S. District Court for the District of Columbia agreed with the House — but stayed enforcement of its ruling pending an appeal from executive branch. The next stop for the case could be the U.S. Supreme Court.
That is, of course, if the executive branch continues with its appeal. It would make little sense for President Trump to continue with a lawsuit that’s at odds with his pledge to "repeal and replace disastrous Obamacare."
If the Trump administration accepts the ruling of the District Court — and effectively ends the cost-sharing reduction subsidies — then Obamacare’s exchanges could collapse. The law requires insurers to cover the cost of those subsidies, regardless of whether the federal government reimburses them. They’d surely pull out of the exchanges rather than lose billions.
President Trump has promised time and time again to repeal and replace Obamacare. Ending the cost-sharing subsidies would help him make good on his pledge to repeal — and would build momentum for Congress to renew its efforts to develop a robust replacement plan.