President Trump’s new budget envisions eviscerating Obamacare — but it also includes money to fund contentious payments to insurance companies next year, in a move that conservatives say will end up sustaining the struggling law.
The budget allocates billions of dollars for cost-sharing payments, or what Capitol Hill calls CSRs, which reimburse insurers who under the law must cover some poor customers’ out-of-pocket health care costs.
Mr. Trump canceled the payments this fall. He derided them as “bailouts” and said Congress had never approved the money. Companies responded by jacking up their rates.
Now, though, the president is requesting that the cash be approved — angering conservative groups that see little reason for Mr. Trump and the Republican-led Congress to reverse a hard-won victory over Obamacare.
“It is disappointing to see this administration proposing to restart the misguided practice of using taxpayer dollars to subsidize big insurers,” said Tim Phillips, president of Americans for Prosperity, a conservative group backed by the Koch brothers.
The move is surprising not only because of Mr. Trump’s past criticism but also because the administration seems committed to trying to dismantle the 2010 Affordable Care Act piece by piece. His budget calls for even bigger changes such as replacing the law with block grants to states to come up with their own solutions.
That idea failed to garner enough support to clear the Senate last year, and Republican leaders in Congress say they are not eager to get burned by another repeal-and-replace debate.
Public polling suggests most Americans will hold Mr. Trump and congressional Republicans responsible for turbulence in the markets because they control all levers of political power in Washington.
Paying out the cost-sharing money could constrain premium increases, which could tamp down voter anger over sticker shock.
The Congressional Budget Office has estimated that the cost-sharing payments will be $9 billion each year for 2018 and 2019.
However, it projects that the government would save $6 billion in 2018 and $14 billion in 2019 because taxpayers wouldn’t have to shell out as much in premium subsidies that chase higher rates that insurers set to make up for the loss of reimbursement.
Mr. Trump’s fiscal 2019 budget also includes $812 million for a risk corridor program that was supposed to limit insurers’ losses and bolster their participation in web-based health care exchanges in the law’s early rounds.
Insurers that suffered losses were supposed to receive payments from better-performing companies, though a sicker-than-expected customer base created an imbalance, and Republican demands on a 2014 spending bill thwarted any attempts to make companies whole with taxpayer dollars.
Mr. Trump’s request for Obamacare stabilization money does not have the force of law. It’s a wish list that Congress can accept or discard as it draws in the lines of an omnibus spending bill in the coming weeks.
Some conservatives say the money is a nonstarter.
“Including CSRs and risk corridors in the White House budget would only prop up the failing health care law. Obamacare was manipulated to put the profits of private health insurance companies ahead of taxpaying Americans, and it’s good that we have put an end to these bailout programs,” Mr. Phillips said.
Sen. Marco Rubio, the Florida Republican who led the charge against risk-corridor payments under Mr. Obama, reminded people via Twitter last week that he has been fighting for years to make sure taxpayers aren’t on the hook for insurers’ losses.
He said it would be unfair to bail out insurers when critical programs face budget cuts.
Some analysts questioned why the administration would include risk-corridor funding at this point, since many insurers have adjusted their rates to the cost of covering people five years into the Obamacare program.
“This is really water under the bridge. Funding the risk corridor program at this point would cover prior losses that insurers had, but it wouldn’t in any meaningful way affect premiums going forward,” said Larry Levitt, senior vice president for the Kaiser Family Foundation. “And, some of the insurers that suffered losses aren’t even in the marketplaces anymore.”
Mr. Levitt said there does appear to be a “softening among Republicans around the idea of federal funding to stabilize the insurance market.”
A separate form of risk mitigation, known as reinsurance, is gaining momentum, as Republican leaders settle on their spending plans.
Sen. Susan M. Collins, Maine Republican, and Sen. Bill Nelson, Florida Democrat, are pushing a bill that includes $5 billion over two years to subsidize extra-costly consumers in the marketplace.
The Trump administration recently hailed Alaska for setting up a state-based reinsurance program to reel in rates.
Ms. Collins even tied her support for the Republican tax cut bill to votes on the CSR payments and her reinsurance plan, saying it would mitigate premium increases because of the tax legislation repeal of the individual mandate to hold insurance.
House Republican moderates are warming to the idea of reinsurance. Rep. Ryan A. Costello, Pennsylvania Republican, has presented a plan for $10 billion.
House aides said Energy and Commerce Committee Chairman Greg Walden, Oregon Republican, has been working with Sen. Lamar Alexander, Tennessee Republican and chairman of the Senate Health, Education, Labor and Pensions Committee, and Ms. Collins and Mr. Costello on reconciling the measures so they can bring down premiums in the coming years.