If Trump decides to stop paying them, what will happen?
Killing the cost-sharing subsidies would be a huge and immediate hit to insurance companies offering Obamacare plans. The companies are still required by law to offer their customers discounts, but they could lose the money to help fund them. Without the government payment, they would need to find another way to make up the difference.
Insurers could raise the price of insurance for everyone, a change that would affect even people who don’t get the subsidies. The Kaiser Family Foundation has estimated premiums for a plan would go up by an average of 19 percent without the funding. (This paradoxically could end up costing the government a lot of money, since it is still required by law to help many customers pay their premiums.)
A decision to do away with the subsidies would also send a key signal to the insurance companies that the Trump administration and Congress have decided not to stabilize the market, which has been particularly shaky in some areas. Without the subsidies, insurance could get very expensive in some places in the country. In other areas, no insurance options might be available.
If Trump wanted to fix them, what could he do?
The easiest way would be to encourage Republicans in Congress to pass an appropriations bill that explicitly funds the subsidies. They will have an opportunity soon: Congress is expected to vote on a short-term appropriations bill in the next few weeks.
The Trump administration could also keep fighting the House lawsuit in court. Many legal experts think that the administration has a good chance of winning if the case continues, since courts rarely recognize the right of Congress to sue the White House. It’s not clear if the parties could settle the case in a way that preserves the subsidies, even if they wanted to.
Who wants the funding to continue?
A broad coalition of insurance companies, hospitals, doctors and patient groups want the subsidies to be paid. Democrats in Congress are also strong supporters of the cost-sharing reductions. A letter to the White House this week urging a resolution of the issue was signed by insurers, hospitals, doctors and even the solidly Republican Chamber of Commerce.
Who wants the funding to end?
The House leadership that brought the suit argued that the payments were worrisome because they represented illegal spending. But that does not mean that all Republicans in Congress want to see Obamacare markets in their home state fail. In fact, several key Republicans in Congress, including Greg Walden of Oregon, the chairman of the House Energy and Commerce Committee, have said that they would prefer Congress to pass legislation explicitly funding the subsidies.
But some people in the Trump White House believe that preserving the risk of market failures could create political pressure for a deal on a larger Obamacare replacement bill. On Wednesday, President Trump told The Journal, “I don’t want people to get hurt,” then added, “What I think should happen — and will happen — is the Democrats will start calling me and negotiating.”