Trump Brags About Tanking Insurer Stocks With Health Subsidy CutBy , , and
President acts without clear path in Congress for next step
Middle-income voters may see premiums spike before election
Donald Trump boasted about triggering a decline in health insurance stocks with his decision to end federal subsidies to those companies that help low-income Americans afford their medical coverage.
“Health Insurance stocks, which have gone through the roof during the ObamaCare years, plunged yesterday after I ended their Dems windfall!” the president told his 40.5 million Twitter followers on Saturday.
Shares of insurers still present on Affordable Care Act exchanges slumped on Friday. St. Louis-based Centene Corp. dropped more than 3 percent. Even large health insurers that have mostly or entirely exited the Obamacare exchanges saw an impact, and publicly traded hospital chains fell sharply as well. Hospital operator Tenet Healthcare Corp. tumbled 5 percent.
Trump’s tweet was a departure from his regular comments taking credit for strength in the U.S. stock market. “It would be really nice if the Fake News Media would report the virtually unprecedented Stock Market growth since the election,” he tweeted on Wednesday.
Analysts considered cutting fourth-quarter and 2018 earnings estimates for insurers and hospitals. “The effect of the order is likely to be profoundly destabilizing,” Mizuho Securities analyst Sheryl Skolnick wrote in a note to clients.
After months of pinning the blame for Obamacare’s shortcomings on Democrats and watching his own party fail to act, Trump, with two actions on Thursday, took ownership of a struggle that’s consumed Republicans for seven years.
The decision to end the government subsidies to insurers was Trump’s most drastic yet among several taken to undermine his predecessor’s signature achievement. Trump on Thursday also signed an executive order directing regulators to pass rules that would allow cheaper, less regulated short-term health plans to be offered.
Ending the insurer subsidies could cost the government some $200 billion over the next decade, because even if the payments are dropped -- Trump’s move is being contested in court -- other, more costly subsidies paid to consumers will continue.
The move lobbed a live bomb at Republican lawmakers, just over a year before mid-term congressional elections, after he publicly berated the party’s Senate leadership for being unable to fulfill its longstanding promise to repeal the law.
“We’re taking a little different route than we had hoped,” Trump said Friday at an event with a conservative group in Washington. “Because Congress, they’re forgetting what their pledges were.”
The move kicks down one of the pillars of a law designed to cut the number of uninsured Americans and disrupts the health-care industry, which accounts for 17 percent of the U.S. economy.
Trump suggested he was trying to force negotiations with Democrats on a health-care plan that could pass muster with the Republican majorities in the House and Senate.
“What would be nice is if the Democratic leaders should come over to the White House,” he told reporters Friday. “If they came over, maybe we could make a deal.”
But if no fix emerges before the 2018 congressional elections, Republicans may have a hard time convincing voters to hold Democrats responsible when they control the Senate, House and White House.
Senator Ted Cruz of Texas warned fellow Republicans at a meeting for conservative donors that they faced a “bloodbath” in next year’s election if they don’t deliver results on health care and tax cuts.
Adding to the political peril, the battle increases the chances of a government shutdown when agency spending authority expires on Dec. 8. Democrats are all but certain to demand a resumption of the cost-sharing reduction subsidies in exchange for their support of any final spending agreement.
The administration, meanwhile, is signaling it won’t go for what Trump called “payoff to insurance companies” or any other Obamacare fix without getting something in return.
While Trump has called the Affordable Care Act a “nightmare,” polls show the public disagrees. Two-thirds of Americans say they want the president to work with Congress to improve Obamacare, according to a poll from the Kaiser Family Foundation conducted before Trump’s action was announced.
The most prominent proposal to fix the law, being crafted by Republican Senator Lamar Alexander of Tennessee and Democratic Senator Patty Murray of Washington, would combine continued cost-sharing subsidies with added flexibility for states to determine the offerings in the individual insurance market. Even if Senate Majority Leader Mitch McConnell were to allow a vote on the Senate floor, conservative opponents would likely filibuster the measure and slow debate.
Trump’s budget director Mick Mulvaney told Politico on Friday that Trump won’t support the Alexander-Murray proposal as it stands or without getting a significant concession on funding for other priorities, potentially including construction of the proposed wall on the U.S. border with Mexico.
The individuals hardest hit by the president’s decision to cut off the cost-sharing subsidies won’t be the low-income people who receive the help, since insurers are required to continue offering them lower deductibles and copays, even if the government funding ends.
Instead, middle-income people who buy their own health insurance without subsidies will bear the burden. That group numbers roughly 8 million, compared to about 10 million who get subsidies. They are likely to face higher insurance prices for 2018 as insurers look to recoup their subsidy shortfall by raising premiums.
“Ironically, it is these unsubsidized folks who have complained the loudest about Obamacare’s big premiums and deductibles,” Robert Laszewski, who runs Health Policy and Strategy Associates, a Washington consulting firm, said by email. “They will now have even more to complain about.”
Where Democrats saw deliberate sabotage, Republicans saw vindication.
“Obamacare has proven itself to be a fatally flawed law, and the House will continue to work with Trump administration to provide the American people a better system,” House Speaker Paul Ryan said in a statement.
Senate Minority Leader Chuck Schumer told reporters on a conference call that withdrawing the subsidies is “one of the worst things the president could do to sabotage our health-care system.”
— With assistance by Justin Sink, Jennifer Jacobs, and Terrence Dopp