New York: President Donald Trump is planning to end key federal subsidies paid to insurance companies under Obamacare, his administration’s most drastic move yet to undermine the health-care law after Republicans in Congress failed to repeal and replace his predecessor’s signature legislative accomplishment.

The cost-sharing reduction payments, known as CSRs, help cover deductibles and other out-of-pocket costs when low-income people use their Affordable Care Act insurance plans. They’re paid monthly to insurers, and are estimated at $7 billion in total this year.

The legality of the payments is the subject of a legal dispute, and health insurers have pushed Congress to appropriate the funds. Congressional action—potentially as part of a package of fixes a bipartisan group of senators have considered—would effectively end the risk of the president ending them unilaterally.

In a statement, the White House said the Department of Justice and the Department of Health and Human Services both concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare.

“The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system," the White House said in the statement. “Congress needs to repeal and replace the disastrous Obamacare law and provide real relief to the American people."

Still, any action to end the payments may face legal obstacles of its own. Seventeen states and the District of Columbia won the right in August to defend the payments in a court case. Politico earlier said the order could come as early as Friday.

Insurers in many states have already boosted their Obamacare rates for 2018 to account for the risk that the cost-sharing payments won’t be made, after months of threats from the Trump administration to cut them off. That will reduce the financial impact on insurers next year, though how they’ll respond for the rest of 2017 wasn’t immediately clear.

The decision follows Trump’s signing Thursday of an executive order that tells federal agencies to consider a number of steps that could erode many of the core tenets of Obamacare.

In the order, the president asked regulators to craft rules that would allow small businesses to band together to buy insurance across state lines, let insurers sell short-term plans curtailed under Obamacare, and permit workers to use funds from tax-advantaged accounts to pay for their own coverage.

Trump opted for an executive order after he was unable to rally Republicans to overturn Obamacare— and as the White House looks to consolidate support for a far-reaching overhaul of the US tax code. But allowing for cheaper plans with fewer benefits favoured by healthier customers could jeopardize the rest of the system, opponents claim.

The administration has also cut advertising for the upcoming enrolment season, which begins on 1 November, as well as grants to groups that help people pick the right plan. Bloomberg

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