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Trump ended Obamacare payments — what happens now?

The only certainty about Obamacare is that there’s a lot of uncertainty.

President Donald Trump stunned Democrats and Republicans in Washington late Thursday evening by announcing that his administration would immediately cease cost-sharing reduction (CSR) payments to insurance companies under Obamacare. Those payments — $7 billion in fiscal year 2017 — helped low-income people in the individual marketplace buy insurance.

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The sudden announcement has insurance companies, members of Congress, state governments, and consumers scrambling to react. Most contacted by VICE News on Friday were caught off-guard and still trying to figure out what will happen.

These are the most likely outcomes:

Congress debates whether to appropriate the CSR payments

The Trump administration claims it is ceasing the CSR payments because it was not legally authorized to do so under the text of the Affordable Care Act. It’s a questionable rationale, given that Trump waited nine months to make the decision, and only then after his previous efforts to repeal and replace Obamacare had failed. Democrats attribute the move to Trump’s openly stated desire to sabotage Barack Obama’s signature legislative achievement. Democratic Sen. Patty Murray of Washington, who is the top-ranking Democrat on the health committee, called it a “spiteful effort to score political points by undermining health care in our country.”

There are some legislative remedies available — for example, Congress could step in and appropriate the CSR funds in order to help stabilize the Obamacare marketplaces. Several Republicans, including the chairman of the Senate health committee Sen. Lamar Alexander of Tennessee, have expressed support, or at least an openness, to continuing those payments. Other Republicans, like Sen. Ted Cruz of Texas, oppose the idea and argue that it’s an expensive bailout of private insurance companies that would disrupt the free market.

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Even if Congress finds a consensus, however, it’s highly unlikely they will do so before Trump’s move affects insurance enrollment for 2018. The next CSR payment is due around Oct. 20, and the open enrollment period in the individual marketplace for 2018 begins November 1 and lasts only 45 days.

There is a bipartisan healthcare solution already in the works with Sen. Alexander and Sen. Murray that could include appropriation for CSR payments. But the Trump administration threw cold water on that effort Friday morning — White House budget chief Mick Mulvaney told Politico. “I’d say I’m pretty sure what we won’t support, which is just a clean Murray-Alexander bill.” Mulvaney insists Trump is still focused on repealing and replacing Obamacare, which is a nonstarter with nearly every Democrat.

In sum, Congress could appropriate money for the CSR payments, but it probably won’t, and even if it did, Trump wants to veto it.

Lawsuits

Democratic attorneys general in California and New York have threatened lawsuits to force the Trump administration to continue the CSR payments. Some have also speculated that health insurers could sue the government for the subsidies as well. The Obamacare law stated these payments to insurers should happen, but then failed to specifically appropriate the money to do so. Now, insurance companies are still forced to offer discounted plans to low-income people, even if the federal government isn’t compensating them.

Nicholas Bagley, a law professor at the University of Michigan who has written extensively about the Affordable Care Act, speculates that insurers could sue the federal government for the funds they authorized but failed to appropriate. Given that the CSR payments were $7 billion the last fiscal year and were expected to be $10 billion the next fiscal year, that could be a lot of lawsuits.

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Insurance Marketplaces

At least in the short term, many, if not most, consumers appear to be shielded from the consequences of Trump’s decision. Most states allowed insurers to hike up their rates for the upcoming open-enrollment period in anticipation that Trump would end the CSR payments.

If a person in the Obamacare exchange qualifies for subsidies, then the federal government will pick up the tab for those increases. That is expected to raise the federal debt by $194 billion over the next 10 years, according to the Congressional Budget Office. If someone makes enough money that they do not qualify for subsidies and are purchasing insurance on the individual marketplace, however, then they will bear the brunt of those premium hikes.

But some states did not allow insurers to hike their prices in the expectation of CSR payments ending, and some of those insurers may decide to pull out of the marketplace before open enrollment begins on Nov. 1 in order to avoid a financial loss. There are 1,524 counties that currently have only one health insurer available on the individual market, so any withdrawals by insurance companies could leave millions of people without any health insurance options in the individual marketplace.

If that happens, one more thing is certain: The results will be devastating.