WASHINGTON/SAN FRANCISCO (Reuters)—On Friday, California, New York and others states vowed to sue President Donald Trump’s administration to stop him from scrapping a key component of Obamacare, subsidies to insurers that help millions of low-income people pay medical expenses, even as Trump invited Democratic leaders to negotiate a deal.
One day after his administration announced plans to end the payments next week, Trump said he would dismantle Obamacare “step by step.”
His latest action raised concerns about chaos in insurance markets. The subsidies cost $7 billion this year and were estimated at $10 billion for 2018, according to congressional analysts.
“As far as the subsidies are concerned, I don’t want to make the insurance companies rich,” Trump told reporters at the White House. “They’re making a fortune by getting that kind of money.”
Trump’s action took aim at a critical element of the 2010 law, his Democratic predecessor Barack Obama’s signature domestic policy achievement. Frustrated by the failure of his fellow Republicans who control both houses of Congress to repeal and replace Obamacare, Trump has taken several steps to chip away at it.
Democrats accused Trump of sabotaging the law.
The Democratic attorneys general of New York and California were joining forces with several other states, including Kentucky, Massachusetts and Connecticut, to file a lawsuit in federal court in California later on Friday. The states will ask the court to force Trump to make the next payment, Massachusetts Attorney General Maura Healey, a Democrat, told reporters.
Legal experts said the states are likely to face an uphill battle in court.
“His effort to gut these subsidies with no warning or even a plan to contain the fallout is breathtakingly reckless,” New York Attorney General Eric Schneiderman said. “This is an effort simply to blow up the system.”
The new lawsuit would be separate from a case pending before an appeals court in the District of Columbia in which 16 Democratic state attorneys general are defending the legality of the payments.
If the subsidies vanish, low-income Americans who obtain insurance through Obamacare online marketplaces where insurers can sell policies would face higher insurance premiums and out-of-pocket medical costs. It would particularly hurt lower-middle-class families whose incomes are still too high to qualify for certain government assistance.
About 10 million people are enrolled in Obamacare through its online marketplaces, and most receive subsidies. Trump’s action came just weeks before the period starting on November 1, when individuals have to begin enrolling for 2018 insurance coverage through the law’s marketplaces.