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Trump scraps Obamacare subsidies in surprise late-night announcement

Donald Trump has planted a timebomb under Obamacare, issuing a notice late on Thursday night that scraps vital federal subsidies underpinning the current healthcare system.

The late-night move caught critics off guard and brought immediate accusations that Trump was unilaterally destroying his predecessor’s signature legislation, the Affordable Care Act, after the Republican-controlled Congress failed to secure changes. The announcement stops federal support of up to $7bn (£5.27bn) to insurance companies to help them cover the medical needs of low-income Americans.

The Trump administration sought to lay the blame for the current crisis in healthcare on former president Barack Obama, claiming the federal subsidies, known as “cost-sharing reduction payments”, were unlawful and “yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system”.

On Friday morning Trump claimed in a tweet that “the Democrats [sic] ObamaCare is imploding” and appeared to call on the Democrats to negotiate with him over healthcare legislation.

“Massive subsidy payments to their pet insurance companies has stopped,” he wrote. “Dems should call me to fix! ... ObamaCare is a broken mess. Piece by piece we will now begin the process of giving America the great HealthCare it deserves!”

Reaction from Democratic politicians and other Trump opponents was swift. Top officials on both coasts leapt to denounce the White House move and threaten legal action to stop the subsidies being revoked.

In California, the state attorney general Xavier Becerra said he was prepared to sue the Trump administration to protect the subsidies. Eric Schneiderman, the attorney general of New York state, followed suit, declaring he would “not allow President Trump to once again use New York families as political pawns in his dangerous, partisan campaign to eviscerate the Affordable Care Act at any cost”.

The attack on the federal subsidies came as a double blow to Obamacare, just hours after Trump had already lashed out at his predecessor’s healthcare reforms by issuing an executive order unilaterally weakening the system. In that order, the president opened the door to cheaper and less comprehensive insurance, which experts predict will result in health plans for the sick becoming more expensive.

Thursday night’s second blow could prove the more deadly of the two as it is targeted at the very foundations of the insurance structures created under Obamacare. A study by the Congressional Budget Office two months ago suggested that terminating the cost-sharing subsidies would lead to a dramatic 20% rise in the average cost of the most popular plans offered by the Affordable Care Act, as well as worsening the federal deficit by almost $200m.

Even moderate conservative voices were aghast by the move. Charlie Sykes, a prominent conservative talkshow host, said: “What we have now, for better or worse, is Trumpcare. Trump has said he wants Obamacare to implode. Is now taking steps to make it implode. Now owns all of the consequences.”

Among Republican leaders in Congress, the speaker of the House of Representatives came to Trump’s support, even though his own party had failed to find a workable replacement for Obamacare. Paul Ryan said the president’s efforts to unpick Obama’s reforms marked a “monumental affirmation of Congress’s authority … Obamacare has proven itself to be a fatally flawed law”.

Trump had earlier hailed his changes as a step that “will cost the United States government virtually nothing and people will have great, great healthcare. And when I say people, I mean by the millions and millions.”

The administration has taken other steps to derail the ACA: cutting the sign-up period for insurance by half; shutting down for maintenance the website people use to sign up for health insurance; slashing funding for outreach; and repeatedly threatening to end subsidies to insurance companies that cover the poor.

Trump acknowledged efforts to repeal and replace the ACA through legislation had been thwarted not just by Democrats but “a very small, frankly, handful of Republicans”. He said: “We will fix that.”

This article titled "Trump scraps Obamacare subsidies in surprise late-night announcement" was written by Ed Pilkington in New York and Sabrina Siddiqui in Washington, for on Friday 13 October 2017 04.45am

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