Democrats, White House And Health Insurers In Mexican Standoff As Govt. Shutdown Deadline Looms

Heath insurance companies are meeting with CMS Administrator Seema Verma today to try to determine if President Donald Trump intends to pull $7 billion in funding from companies that sell plans on Affordable Care Act exchanges. The cost-sharing reductions (CSR) allow insurance companies to provide 7 million Americans with lower-cost insurance plans on the exchanges.

What's Going On In Healthcare?

Last week, insurers sent a letter to Trump urging him to pass the bill to continue QSR funding, calling it “the most critical action” the president could take to maintain the stability of the healthcare marketplace.

“If Congress doesn’t approve it, or if I don’t approve it, that would mean that Obamacare doesn’t have enough money so it dies immediately as opposed to over a period of time,” Trump told the Wall Street Journal.

According to Height Securities, insurers are getting desperate to know whether or not they will be receiving their funding.

“As deadlines approach for insurers to file their plans for next year’s ACA marketplaces, companies say they cannot set rates amid the ongoing uncertainty around the CSR payments,” Height wrote in a note to clients.

Democrats plan on doing everything they can to preserve the integrity of the healthcare marketplace.

“Congressional Democrats have said they will demand the CSR payments be included in the appropriations legislation that must receive a vote by Friday, April 28, the date on which the current funding legislation is set to expire,” Height wrote.

Boiling It Down

In other words, Democrats say they will not vote to prevent a government shutdown if the appropriations bill doesn’t include insurers’ CSR funding. If the appropriations bill doesn’t pass by Tuesday, the Obamacare marketplace could collapse and a partial government shutdown could be triggered simultaneously.

After investors initially responded very positively to Trump’s election, they have become increasingly cautious amid the uncertainty in Washington in recent weeks. Since March 1, the SPDR S&P 500 ETF Trust (NYSE: SPY) is down 2.4 percent, while the Health Care SPDR (ETF) (NYSE: XLV) is down 3.0 percent.

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Image Credit: By Martin SoulStealer - Flickr: Mexican Standoff, CC BY 2.0, via Wikimedia Commons