How Trump’s End to Obamacare Subsidies Increases the Threat of a Government Shutdown

Manuel Balce Ceneta / AP

Congressional Democrats raised the prospect of a government shutdown over President Trump’s decision to cut off funding for a key Affordable Care Act subsidy, saying the payments may need to be reinstated for their caucus to approve the next round of appropriations.

Trump on Friday announced he would no longer make the cost-sharing reduction payments the federal government has provided to health insurance companies to offset the cost of covering low-income customers. The roughly $7 billion in payments are seen as vital to stabilizing the insurance market and protecting President Obama’s signature law. The Congressional Budget Office has estimated that insurance premiums would skyrocket, the number of uninsured would rise and the federal budget deficit would soar by $194 billion if the subsidies were terminated.

A stopgap bill approved in September that is currently funding agencies at their fiscal 2017 levels is set to expire Dec. 8. Trump struck the deal for the short-term continuing resolution in negotiations with Democrats, upon whom Republicans depended to get the measure through Congress. Just 133 House Republicans voted for the bill, while 183 Democrats approved it. In the Senate, all 17 no votes came from the Republican side.

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"We are going to have a very good opportunity in the omnibus to get this done in a bipartisan way, if we can’t get it done sooner,” Senate Minority Leader Chuck Schumer, D-N.Y., said Friday. He added Democrats would work “very hard” with “a whole lot of Republicans” who want to get the payments reinstated.

House Minority Leader Nancy Pelosi, D-Calif., said at a press conference Friday her preference was for the House to move more quickly on the subsidies, either through an upcoming bill to boost disaster relief funding or as a standalone measure next week. Any shutdown, she said, would fall squarely on the shoulders of Republicans.  

“There’s no risk on our part of a government shutdown because we don’t have a majority,” Pelosi said. “We have never ever supported a shutdown.” Still, the minority leader left open the possibility of roping the subsidy payments into a forthcoming appropriations bill.

The battle to avoid a December shutdown could be further complicated by ongoing disagreements over immigration and border security priorities. Trump this week sent a letter to Congress spelling out his immigration priorities, which included appropriations for a wall along the U.S.-Mexico border and a hiring surge at Immigration and Customs Enforcement, as well as immigration judges and prosecutors. The president has previously threatened a shutdown over wall funding, which Democrats have insisted is a non-starter.

Pelosi reiterated that sentiment in the context of the cost-sharing subsidies.

“The president wants to threaten the good health of the American people to get a wall between the U.S. and Mexico?” she asked. “That won’t work.”

Sen. Patrick Leahy, D-Vt., the top Democrat on the Senate Appropriations Committee, stopped short of threatening a shutdown, but made clear his opposition to Trump’s decision.

“This is no longer the campaign, and health care policy is more than a partisan applause line,” Leahy said. “It is long past time for the president to realize that real lives are at stake.”

The renewed pressure on reaching a deal to keep federal agencies open past Dec. 8 comes as the White House has asked federal agencies to immediately cut $5.6 billion in planned spending. Office of Management and Budget Director Mick Mulvaney sent a letter to congressional appropriators on Friday asking lawmakers to cancel the funds that were previously given to agencies on an emergency basis. The cancellations would affect various spending allocations awarded over the last few years to the departments of Agriculture, Energy and Labor, as well as the Army Corps of Engineers. The bulk of the $5.6 billion would stem from ending Energy’s Advanced Technology Vehicle Loan Program.

The White House did not request the cancellations as part of any effort to offset new emergency funding in the wake of a barrage of devastating hurricanes and wildfires, Mulvaney said, but rather the move was part of "a regular analysis" of "unobligated funds that are no longer needed for the purpose for which they were appropriated." Trump has signed a $15 billion relief package to aid Texas and other states after hurricanes Harvey and Irma, and has requested another $36.5 billion to refill disaster relief coffers after Hurricane Maria and an array of wildfires in the western United States.

As part of the regular, non-emergency appropriations process, lawmakers and the White House must agree to either significant spending cuts or a budget deal that raises spending caps established by the 2011 Budget Control Act. Even carrying on the existing spending levels without adjusting the funding limits would result in a sequester.

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