Trump is reportedly threatening to blow up Obamacare payments

Millions of low-income people rely on these subsidies to afford insurance.

Budget director Mike Mulvaney. CREDIT: AP Photo/Andrew Harnik
Budget director Mike Mulvaney. CREDIT: AP Photo/Andrew Harnik

The odds of a government shutdown ticked up on Tuesday night when Trump’s budget director Mick Mulvaney reportedly told House Minority Leader Nancy Pelosi (D-CA) that the Trump administration might not cover next month’s cost sharing payments for low-income people with Obamacare marketplace plans.

Cost-sharing funds partially subsidize deductibles and co-payments for more than 7 million low-income Americans, making it possible for many of them to afford their insurance. Cutting off the payments could potentially kick millions of people off the state exchanges, pushing some private insurers to withdraw as well. Premiums could shoot up across the board.

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Trump had previously threatened to cut off the payments earlier this month if Congress failed to appropriate money for his proposed border wall in the upcoming budget. But he caved on border wall funding earlier this week, seemingly clearing the path for a budget deal that would avert a government shutdown before the Friday deadline. But not long afterward, Mulvaney informed Pelosi that “absent Congressional action, the administration would cease making [cost sharing] payments,” an anonymous source informed the Washington Post’s Greg Sargent.

Pelosi has said that Democrats will block any budget deal that doesn’t protect cost sharing, thereby triggering a shutdown of the federal government. When she spoke to Mulvaney, he told her that Trump won’t sign a bill that includes the subsidies, a source told Politico.

Given the Trump administration’s recent prevarication on cost-sharing — and President Donald Trump’s habit of making threats he has no intention of acting on — it’s hard to gauge the seriousness of Mulvaney’s ultimatum. But if the administration holds the line this time around, they could be setting up a massive game of shutdown chicken for the days or weeks ahead.

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It’s also unclear what the White House would have to gain from shoving millions of people off their marketplace plans. Trump has suggested that “letting Obamacare fail” would be a way to generate support for Republican health care reform, but the proposition that Democrats would get blamed for a marketplace collapse that occurred on Trump’s watch seems dubious at best.

UPDATE: Politico’s John Bresnahan reported Wednesday afternoon that White House officials have been assuring lawmakers of their intention to keep up the cost-sharing subsidies.