Business & Tech

Baker assails move to halt Obamacare subsidies; Healey joins suit to protect payments

Governor Charlie Baker.
Stephan Savoia/Associated Press
Governor Charlie Baker.

Elected officials from both parties and leaders from all corners of the health care industry on Friday condemned the White House’s decision to cut off federal health care subsidies, warning the move will throw insurance markets into chaos and endanger affordable coverage for thousands of families.

Attorney General Maura Healey said she was joining 18 other states, including Connecticut and Rhode Island, in suing the Trump administration, arguing that it is required by law to continue the payments, known as cost-sharing reductions. They were expected to total $146 million for insurance companies in Massachusetts next year.

“What the president is trying to do is illegal, it’s harmful, and it’s got to be stopped,” she said in a call with reporters. “What Donald Trump is doing is raising families’ costs for health care and cutting off access to health care. . . . It’s cruel and irresponsible.”

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Healey, a Democrat who has filed several lawsuits against the Trump administration, said the new court action seeks an injunction to ensure that the administration continues making payments.

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Governor Charlie Baker joined Democrats in denouncing the White House move to roll back a key component of the Affordable Care Act. The Republican governor has urged federal officials to keep paying the subsidies.

“The governor believes that the Trump administration is making the wrong decision to eliminate cost sharing reductions for all 50 states, as it will destabilize insurance markets and jeopardize coverage for thousands of Massachusetts residents,” said Baker’s spokeswoman, Lizzy Guyton.

Health insurers, consumer advocates, and politicians from both political parties had feared for months that the Trump administration would move to end the subsidies, which are used to offset the cost of coverage for lower-income Americans. Insurance companies had warned that they would have to sharply hike prices if the subsidies disappeared.

If insurance prices rise significantly, coverage could become too expensive for some individuals and families, causing them to go without — a setback for Massachusetts, where more than 97 percent of residents are covered.

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The White House announced its decision late Thursday, just hours after the Massachusetts Health Connector said that it would try to shield consumers from huge increases by setting insurance rates that assume the government subsidies would continue. It was a blow to state officials who had spent months deliberating how to best protect consumers during a period of unusual uncertainty in Washington — only to be forced to rethink the situation yet again. It was not immediately clear how the state would respond to the White House’s decision.

If the government subsidies had continued, rates for popular midlevel plans on the Connector were expected to rise 8.7 percent, on average. Without the subsidies, the rates are expected to soar 24 percent.

The Connector offers coverage to people who don’t receive benefits through an employer. Most of the people who get subsidized coverage on the Connector also receive tax credits to help defray the cost of their premiums. When insurance rates rise, their tax credits also rise. So premium increases are felt most by individuals who buy insurance on the Connector but earn too much to qualify for tax credits. In Massachusetts, that includes more than 80,000 people.

Individuals are scheduled to start shopping for 2018 coverage on Nov. 1.

“The federal government’s announcement on cost sharing reductions is disruptive for our 80,000 potentially impacted members and our insurance market,” Connector spokesman Jason Lefferts said Friday. “We have spent significant time with the Division of Insurance and our carriers to discuss contingency plans, and will review alternative pathways as we work toward the best possible option that minimizes these impacts.”

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The government subsidies are paid monthly, so the White House’s declaration left insurers guessing whether to expect any payments in October and the rest of the year.

“We’re trying to understand the timing,” said Lora M. Pellegrini, president of the Massachusetts Association of Health Plans. “Maybe the money just doesn’t show up.”

The government subsidies were included in the Affordable Care Act, also known as Obamacare, to help reduce deductibles and other out-of-pocket costs. They are available to individuals earning up to $30,150 a year, and families of four earning up to $61,500.

Trump has repeatedly threatened to yank the subsidies, which he calls “bailouts.”

Now that the president has pledged to follow through on his threat, Pellegrini said insurers want state officials to approve higher insurance rates for 2018, so that insurers can cover their costs. “We have to deal with the reality as we know it today,” she said.

The decision to cut insurance subsidies was the president’s second effort on Thursday to hack away at the Affordable Care Act; he also signed an executive order to allow for cheaper, less comprehensive insurance plans sold through business associations. That move drew rebukes from advocates of the health care law but received support from business groups.

Trump and other Republicans say the national health law approved under President Obama limits choice and drives up costs. The House passed a bill to repeal and replace the law earlier this year, but the Senate has failed to do so.

“ObamaCare is a broken mess,” Trump tweeted Friday. “Piece by piece we will now begin the process of giving America the great HealthCare it deserves!”

Democrats pounced on the White House’s decision, calling it the latest attack on access to affordable health care.

“President Trump and Republicans did not have the votes to repeal Obamacare, so they are instead sabotaging the Affordable Care Act and dismantling it through executive orders,” Senator Edward J. Markey, a Massachusetts Democrat, said in a statement.

A bipartisan group of senators has been working on a fix to shore up insurance markets by guaranteeing the government subsidies, but that effort stalled in recent weeks when Republicans made another stab at repealing the federal health care law.

The health care industry has slammed the administration’s efforts to unravel the national health law. The Massachusetts Health & Hospital Association called the latest move reckless and destructive.

“It is now clear that health care for our nation is in dire jeopardy,” said Dr. Henry L. Dorkin, president of the Massachusetts Medical Society.

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@
globe.com
. Follow her on Twitter @priyanka_dayal.