The White House announced on Thursday that the government could no longer lawfully pay health care subsidies under the affordable care act or also known as the “cost-sharing reduction payments.” Few hours from signing the executive order which directs the government agencies to design affordable insurance systems, White House issued a statement the said subsidies could not be continued legally because of the “lack of formal authorization by the Congress.” The White House said that the subsidy payments are not funded and that there is no appropriation for it.

Trump’s administration said that the cost-sharing reduction (CSR) payments abused taxpayers’ money and skirted the law to prop up a broken system.

Executive Order

President Trump had repeatedly threatened to scrap the subsidy payments since his presidency had started. The cost-sharing reduction payments under Obamacare was designed to help the low-income American earners to get insured with health care; the program was extended to 20 million Americans.

Health care experts fear that scrapping the subsidies will fail the insurance markets. Spike in premiums for insurance is expected when scrapping of the CSR Payments will push through.

A study conducted by the Congressional Budget Office a few months ago revealed that cutting off the cost-sharing reduction payments will result in a rapid increase in the average cost of the plans offered by the Affordable Care Act by as much as 20% of the current cost.

On the other hand, the executive order signed by Trump includes making an insurance system with less comprehensive plans and short-term medical coverage. The President believes that with lower cost and more options in health care, American people will be “spared from the nightmares of Obamacare.” He said further that millions of people would be happy with his administration’s health care system.

Sparking legal action

Consequently, after threatening to scrap the subsidy payments, legal action to protect it is sparking. New York Attorney General Eric T. Schneiderman expressed his willingness to lead all other attorney generals in a lawsuit to protect the subsidies, saying that he will not allow the President to use families of New York to eviscerate the Affordable Care Act at any cost. He said that thousands of families in New York depends on the Affordable Care Act and they could not afford to lose it.