In it, but not of it. TPM DC

Senators who have haggled for months over a deal to stabilize Obamacare’s individual market released the draft text of their bill late Tuesday night, and have since been attempting to sell the plan to their wary colleagues.

The proposal would fund cost-sharing reduction payments to insurers for two years, allow more people to buy skimpy “copper” health plans, make it easier for states to waive some insurance regulations, and undo the Trump administration’s deep cuts to the budget for urging people to sign up for Obamacare.

In separate memos obtained by TPM, Democrats and Republicans are making very different arguments in support of the deal, touting their victories in the negotiation and playing down the concessions they made to the other side.

As senators, armed with these talking points, start whipping votes, hostility to the deal from right-wing groups and House Republicans and near-constant position-shifting by President Trump could ultimately doom the effort.

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Less than an hour after Sen. Lamar Alexander (R-TN) told a room full of reporters that President Trump had called him Wednesday morning to offer encouragement for Alexander’s bipartisan deal to stabilize Obamacare’s individual market, the mercurial president took to Twitter and seemingly reversed his position.

A few hours later, he flipped again, telling reporters: “Lamar Alexander’s working on it very hard. If something can happen, that’s fine.”

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Virginia’s off-year gubernatorial races have long been an early sign of the national political mood ahead of midterm elections. This year, the contest in the commonwealth is testing something even bigger: Whether Democrats can navigate charged racial issues and win key races in the age of Donald Trump.

Republican nominee Ed Gillespie has been deluging the airwaves with ads bashing Virginia Lt. Gov. Ralph Northam (D) for supporting sanctuary cities and accusing him of being “weak on MS-13” gang violence and wanting to tear down the state’s confederate monuments. Northam has held a slight lead in most public polls of the race, but strategists in both parties think the Nov. 5 election could still go either way.

That has some Democrats nervous 20 days out from the election.

“If something were to happen and we were to lose that governor’s race, shit, Republicans are going to want to make every race in the country a referendum on MS-13,” said one Democratic strategist working on a number of races around the country. “We’re getting full Donald Trump primal scream racism up on the air right now. We’d better be able to beat it. … We don’t want these guys to learn the way to win a race is to turn it into a white power argument.”

While Democrats see Gillespie’s decision to pivot hard right on hot-button cultural issues like immigration as one way to shore up his weak base, they admit that they better be able to defeat him in Virginia if they hope to hold Senate seats in even tougher territory next year and make a real play for winning back the House.

Virginia has long been a harbinger of future elections. Big wins by Govs. George Allen (R) in 1993, Tim Kaine (D) in 2005 and Bob McDonnell (R) in 2009 all were early signs that their parties would have huge success at the ballot box the next year. Even current Gov. Terry McAuliffe’s (D) closer-than-expected 2013 win against hardline conservative Ken Cuccinelli (R) was an early sign that all was not well for the Democratic Party heading into a disastrous 2014 midterm cycle.

A trio of public polls released Tuesday found Gillespie within the margin of error, including one that showed Gillespie with a lead for the first time in the campaign.

A loss in a state President Obama and Hillary Clinton carried could also deal a major psychic blow to Democrats looking to bounce back in the age of Trump — especially after a disappointing loss in an open House seat in Georgia and near misses in a number of other heavily Republican House seats across the country.

“The history is really clear that Virginia is the early warning system,” said Democratic strategist Jesse Ferguson, a Virginia native who’s a veteran of the Clinton campaign and dozens of others in the state and nationally. “No one should expect this to be anything but close and no one should downplay how important it is that Democrats win. You can write off a special election in a congressional district we had no business competing in in the first place as an aberration. Virginia will be not an aberration but an indication of where we are in our efforts to claw back from 2016.”

Gillespie’s hard-right charge on immigration is a major reversal of his previous, big-tent approach to politics, as TPM previously documented. He once warned racial demagoguery against immigrants was a “siren song” that Republicans must resist. But lately he’s been walking the tightrope on the issue, campaigning with Vice President Mike Pence while dancing around whether he’d invite President Trump to stump with him, and campaigning in immigrant-heavy communities in more liberal Northern Virginia even as he airs the charged ads in heavy rotation elsewhere in the state. That’s a contrast with Northam, who’s holding a rally with President Obama on Thursday.

“The Gillespie folks have found they have to get their base out and that means moving into some of these more social appeals,” said former Rep. Tom Davis (R-VA), who said he thought Northam was better positioned to win but predicted a close finish. “These races are no longer going after the center, it’s all about getting your voters. You’re going after your base with a subtle dog whistle, but you’re not going over the top.”

Democrats nervously remember how things have played out in the state the last few years. While they’ve won most key statewide races this decade, McAuliffe’s narrow win after he led the polls by a comfortable margin in 2013 was followed by Gillespie almost upsetting popular Sen. Mark Warner (D-VA) in 2014 — a one-point margin no one predicted heading into election night. Hillary Clinton had a solid lead over Trump in Virginia for the entirety of the campaign, and an early alarm bell for her campaign on election night was Trump leading in Virginia early in the night before the big cities came in (she ended up winning the state by five points, similar to public polls).

Still, those elections came with Obama in the White House. Now, Trump’s there — and is about as unpopular in the commonwealth as nationally.

The MS-13 ads are particularly salient in Northern Virginia, where the Salvadorian gang has committed some heinous crimes in recent years, while the fight over removing Confederate monuments reverberates most in the more southern parts of the state — and is particularly charged in the wake of the white supremacist violence in Charlottesville.

Northam’s team says he has a small but steady lead — and Gillespie’s attacks are a sign of desperation. Northam’s response has been to outline his own law-and-order bona fides in ads while calling Gillespie’s attacks “a page from Donald Trump’s book.” His team recommends other Democrats do the same in highlighting their own candidates’ biographies to push back.

“He’s willing to do and say anything to get elected, principles be damned, and he’s getting desperate. He’s decided to go full Trump,” said Northam adviser Dave Turner. “People are seeing Ed Gillespie’s ads for what they are: Racially tinged Willie Horton style unmoored attacks.”

Gillespie’s campaign didn’t respond to requests for comment for this story. His allies dispute that his attacks are racially charged.

“Democrats have tried to use this issue and call it racist but … why would you want to give quarter to a gang that as recently as three months ago brutalized its victims?” Republican Party of Virginia Chairman John Whitbeck told TPM, pointing out that Northam did vote to protect sanctuary cities (even though none exist in Virginia). “I don’t know why Ralph Northam would put the rights of illegal immigrants over Virginians.”

Whitbeck said every election is now a base election — and predicted Gillespie’s move could send him to the governor’s mansion, demoralizing Democrats.

“In this particular era of polarization the turning out of your base is crucial to success. If you have the more enthusiastic voter side you’re likely to prevail,” Whitbeck said. “Democrats have tried to make every race a referendum on national politics, and they have lost every single one. If they lose this one, it will be a back-breaking blow to their narrative.”

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Tierney Sneed contributed reporting.

President Donald Trump’s decision last week to terminate billions in subsidies to insurance companies that are required under the Affordable Care Act, lit a new fire under some members of Congress who have been working for months to guarantee the subsidy payments and protect the individual market from the White House’s whims.

On Tuesday, Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA) announced a deal that would fund the cost-sharing reduction payments for two years, make it easier for states to waive some health care regulations, and restore the budget for open enrollment outreach Trump gutted earlier this fall.

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A report released Thursday by the health care consulting firm Avalere dives into the impact of President Donald Trump’s move Friday to cut off cost-sharing reduction (CSR) payments to health insurance companies weeks before the start of the crucial open enrollment period.

Because the companies are obligated by law to lower the cost of coverage for low-income patients with severe health needs, and can’t raise their rates until next year, Avalere calculates that the insurers will have to eat a $1 billion loss between now and January.

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President Donald Trump on Tuesday morning announced that Rep. Tom Marino (R-PA) withdrew his name from consideration to be Trump’s drug czar following a report from the Washington Post and CBS News revealing that Marino pushed legislation that made it harder for the DEA to stop shipments of opioids.

Following the weekend report, Sen. Joe Manchin (D-WV) on Monday urged Trump to withdraw Marino as the nominee to lead the Office of National Drug Control Policy, citing the reporting from the Washington Post and CBS News. Manchin said that the revelation “calls into question Congressman Marino’s ability” to serve as the drug czar.

Trump told reporters Monday afternoon that he would look into the report on Marino’s role in pushing the legislation. Manchin quickly thanked Trump after the President announced that Marino withdrew from consideration.

An investigation by the Washington Post and CBS News revealed that Marino was the leading advocate for a bill passed in April 2016 that was backed by the pharmaceutical industry. The law makes it nearly impossible for the DEA to freeze shipments of harmful medications like opioids from companies with suspicious sales.

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President Donald Trump’s decision last week to pull the trigger on his oft-repeated threat to cut off subsidies to health insurance companies is having widespread fallout, with many states scrambling to approve higher insurance rates for 2018 to make up for the loss and keep insurers from fleeing the market altogether.

Because the insurance companies are required by law to cover everyone regardless of their health status and lower the cost of care for low-income patients, and because many had assumed the government would keep making the cost sharing reduction (CSR) payments, Trump’s move has thrown them into turmoil.

The vast majority either had raised their rates already in anticipation of the CSR cut or are filing for emergency rate hikes now. And while these rate hikes will not impact the more than 80 percent of individual market enrollees who get government tax credits, they will cost the government billions of dollars as those tax credits creep upward to cover the difference. The rate increases will also slam the millions of middle class Americans whose individual health plans are unsubsidized.

The timing of the announcement—mere weeks before the start of open enrollment period for 2018 and just after insurers had already signed contracts for participating  —could not have been worse.

“Potentially the biggest effect of all this is just to create confusion,” warned Larry Levitt, the vice president of the Kaiser Family Foundation. “It would be quite understandable if consumers are perplexed about whether subsidies are still available for them, which they are.”

Rates on the rise

Across the country, the non-partisan Congressional Budget Office has predicted about a 25 percent increase in insurance rates over two years solely due to the subsidy cuts. Already, in markets where insurance companies did not originally price for the yanking of the CSRs, that prediction is coming true.

On Friday, Oregon’s Department of Consumer and Business Services ordered health insurance companies on the state’s individual market to hike their 2018 rates by 7.1 percent, “in order to ensure carriers can continue to offer coverage in Oregon.”

“This increase will affect plans both on and off, and will compensate for the $49 million worth of cost-sharing reduction payments that the federal government will no longer be making to Oregon insurance companies in 2018.”

Alaska ordered a similar rate increase of 5 to 6 percent. In Arkansas, where insurers submitted two sets of rates—one assuming Trump continued funding CSRs and one assuming last week’s cutoff—the state approved the much higher rate, leading to a 25 percent jump in costs for some non-subsidized residents. In Pennsylvania, the increase will be near 30 percent, and in Florida, patients will pay between 26 and 72 percent more next year.

Many states are only hiking the rate of their silver-tier plans to cover the cost of the lost subsidies, but others, like Indiana, are raising rates across board. According to an AP analysis, Republican-controlled states that did not expand Medicaid, and that voted for Trump, will be the hardest hit.

“Middle class consumers will get hurt, but that’s not what’s happening in most places,” Levitt explained. “It’s really hitting tax payers, because the added cost of the increased tax credits will exceed the federal savings from cutting CSRs.”

Courtrooms and chaos

On Friday, nearly 20 state attorneys general sued the Trump administration over the abrupt subsidy withdrawal, arguing the move violated the text of the Affordable Care Act and the Administrative Procedure Act. The states aim to force the White House to make its October payment via a temporary restraining order while the case is heard, and other legal actions could be close behind.

Because Trump ordered the payments to cease immediately and the rate hikes don’t go into effect until 2018, insurance companies have to eat the loss of tens of millions of dollars between now and the end of December.

“I’ve heard of insurers exploring their options to get this money back through legal action,” Levitt told TPM. “Under the law they still seem to be owed this money.”

Yet not only have insurers not filed lawsuits yet, they have not fled the markets en masse as many predicted.

Though some individual insurers, most vocally in Montana, have threatened to drop out of the marketplace if their rate increases are not approved by regulators, the vast majority are gritting their teeth and staying put.

“For the most part, insurers had a sense this could be coming,” Levitt said. “Those that didn’t feel they could manage it had already left. But because this was just one of several actions the Trump administration has taken to undermine the marketplace, the question on insurers’ minds is: what might come next?”

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The head of the Environmental Protection Agency in effect declared trench warfare on environmental groups on Monday, ending a practice he dubbed “Sue & Settle” by which the EPA would often settle lawsuits brought by outside groups in an attempt to get the agency to enforce its own rules.

“As of today with this directive and the memorandum, we’re no longer going to be involved in that practice,” Pruitt told a small group of reporters, including TPM, Monday morning at the EPA. “It’s a regulation through litigation process.”

Pruitt painted the policy as a way that environmental groups profited off the agency during the Obama years, while those groups worked together to circumvent the normal rule-making process and create more stringent environmental regulations.

“We should engage in rule-making that takes into consideration the voices that will be impacted across the country,” he said. “What this sue-and-settle practice has done historically has bypassed that altogether.”

The rule change could force environmental groups to spend much more time and effort on lawsuits aimed at making the EPA enforce its own rules and abide by agreed-upon timelines—spreading them thinner and making it harder for them to expend effort on other, more complicated cases. The EPA’s decision to refuse to reimburse lawyers’ fees also could be costly to environmental groups, as well as make it harder and less likely for average citizens and localities to undertake lawsuits to get the EPA to do what it’s legally required to do.

Pruitt pledged that the agency would no longer reimburse attorneys’ fees in cases where it decides to avoid a lawsuit, arguing that both environmental and business groups had abused it to enrich themselves in the past.

“This is not particular to one type of plaintiff,” he said. “There should be no attorneys’ fees paid, period, no matter who the plaintiff is.”

Combined with measures to slash staff, a pattern of issuing fewer and lighter fines, and the rollback of Obama-era rules that crack down on greenhouse gas emissions from power plants to mitigate the effects of climate change, Pruitt’s latest move is part of an overall shift at Trump’s EPA that’s radically more friendly to big business and hostile towards environmental groups.

The U.S. Chamber of Commerce, for instance, has railed against “Sue & Settle” for years.

The new memorandum formalizes a position of fighting every lawsuit tooth-and-nail that Pruitt had announced early in his tenure at the EPA. Back in February, he’d promised he wouldn’t allow “regulation through litigation.” The Justice Department also has stopped negotiating settlements that end up with payments to outside groups to cover attorneys’ or other fees.

Environmental groups fired back at Pruitt after his new declaration.

“Scott Pruitt and his polluter cronies continue to perpetrate lies about the law as an excuse for refusing enforcing it — but when it comes to the law, the truth has a way of catching up with you,” Sierra Club Environmental Law Program Director Pat Gallagher said in a statement. “If Pruitt thinks that by frivolously litigating deadline cases he will deter the Sierra Club or other citizen groups from holding him accountable in court, he should think again – we will not be deterred.”

Fewer than a dozen reporters were included at the event with Pruitt, and some of them, including TPM, rarely if ever cover the environmental beat closely—a fact that frustrated some environmental reporters who weren’t invited to attend:

Hear the full audio of the event below:

This story was updated at 1:15 p.m. to include the Sierra Club’s response.

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President Donald Trump ended the months-long speculation on whether he would end Obamacare insurer subsidies that are the subject of GOP lawsuit, with an announcement Thursday he was ending them immediately, including a payment due this week.

While the question of their legality was still being hashed out in court, Trump has made clear his convoluted political reasoning behind ending them: that it would put pressure on Democrats to cooperate with his attempts to dismantle the Affordable Care Act.

But it’s still not clear how much bargaining power his blatant move to sabotage the ACA marketplaces really brings him. Democrats, after his announcement, remained stalwart that they believed Republicans now own the health care system, and all the chaos Trump causes in it. If anything, it’s Republicans who are split on how to respond to Trump’s move.

“In this, politically, he’s in much worse shape than we are,” Minority Leader Chuck Schumer (D-NY) said on a conference call with reporters Friday. “The American people, even a large number of Republicans, are on our side in terms improving the system, not destroying it. So I don’t think he has much leverage to threaten or bully.”

The subsidies are known as cost-sharing reduction payments, and they subsidize insurers for keeping out-of-pocket costs downs for low income individuals. House Republicans sued the Obama administration in 2014, claiming the payments were illegal because they hadn’t been appropriated by Congress.

Regardless of how that case would have concluded, Trump, in his comments about ending the subsidies, didn’t give the sense that Congress’ power of the purse was his primary interest.

As far back as April, Trump has threatened that ending the subsidies would be tool for him to bring Democrats to the Obamacare repeal negotiating table. He repeated the argument on Friday, while alleging that insurance companies were already rich and they didn’t support his election.

Democrats argue that if Trump was so concerned about the constitutional arguments against the payments, he would have stopped them as soon as he took office, rather than after watching congressional repeal efforts collapse multiple times.

“This is just creating uncertainty and instability in the markets and it’s going to raise premiums and I think that everyone knows that Republicans are going to own this,” a Democratic staffer of the Senate HELP committee told TPM.

A spokesman for Senate Majority Leader Mitch McConnell pushed back on that claim that Republicans now own what happens to Obamacare.

“[I]t’s amusing to me how desperate Democrats are to rid themselves of the failed law they worked so hard to force on the country. You’d think they’d be proud of it,” the spokesman, Don Stewart, told TPM via email.

The irony is that a bipartisan deal being worked on in the Senate to continue the subsidies — or even, perhaps, an affirmative statement from Trump that the payments would go on — would have had some political upsides for Republicans as they headed into the 2018 midterms. Since some insurers have already priced in a premium increase for 2018 assuming the payments would be withdrawn, continuing the subsidy payments would have set up the potential for premium rates to come back down the following year, which would have been announced before Americans headed to the polls.

Instead, there’s a solid chance that insurers who didn’t plan for termination of the subsidies will exit the marketplaces this year due to the shortfall, while Americans —particularly those whose premiums aren’t subsidized by Obamacare’s tax credits — will see their premiums spike. A Congressional Budget Office analysis on what would happen if the payments ended found that premiums would rise 20 percent next year, while 5 percent of Americans would live in areas without any ACA insurers.

A Kaiser Family Foundation poll released Friday showed that 71 percent of Americans believe that the Trump administration should try to make Obamacare work rather than make it fail to replace it later, with even more Republicans supporting the former approach over the latter.

House Speaker Paul Ryan (R-WI), who took over leading the lawsuit against subsidies once Speaker John Boehner stepped down, praised Trump’s decision in a statement Thursday night.

Other GOP House members — albeit Republicans who are retiring next year — criticized the move, as did Sen. Susan Collins (R-ME), who voted against Senate GOP repeal efforts.

“I think the President is ill advised to take this course of action, because we at the end of the day will own this,” Rep. Charlie Dent (R-PA) said on CNN Friday.

Republican governors in states that have been receptive to Obamacare also bashed Trump’s move, with Gov. Brian Sandoval (R-NV) calling it “devastating” and Gov. Charlie Baker (R-MA) labelling it the “wrong decision.”

There’s still a chance that subsidies are revived by a bipartisan fix that HELP Chairman Lamar Alexander (R-TN) and ranking member Sen. Patty Murray (D-WA) have been working on. A Democratic HELP staffer said the negotiations — which were interrupted by the most Senate repeal attempt — are ongoing. Alexander’s office did not return TPM’s inquiries.

The White House has sent mixed signals as to whether it would sign off on a compromise. Office of Management and Budget Secretary Mick Mulvaney shot down the idea that Trump would sign on to a Murray-Alexander bill unless he got other concessions, such as a border wall, while Trump himself told Alexander the week before last that he approved the senator’s approach, a GOP aide told Axios.

It’s worth noting that while Republicans were working on their repeal effort — and even after it failed —several prominent GOP lawmakers supported continuing the subsidies in some way shape or form.

“We’ve seen this story before,” another Senate Democratic staffer told TPM. “Republicans say it would be a bad idea if Trump does something. Trump does it, and then congressional Republicans tie themselves in knots to say it’s actually fine. They’re still afraid to be crosswise with the President, even if it means premiums in their state go up.”

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NEW YORK—New York Attorney General Eric Schneiderman (D) announced Friday that he is teaming up with his Democratic counterparts in some dozen states to sue to block President Donald Trump’s “reckless and cruel” move to end crucial subsidies that the Affordable Care Act provides to insurers.

“People will suffer and people will die” if the Trump administration’s “unlawful” decision stands, Schneiderman warned in a press conference at his downtown Manhattan office.

The New York Democrat is joining a federal lawsuit that will be filed in the Northern District of California Friday arguing that the government is legally required under the Affordable Care Act to continue to make the payments, known as cost-sharing reductions, that allow insurers to keep out-of-pocket costs down for low-income individuals.

Roughly 730,000 New York residents receive some $900 million in cost-sharing reduction payments, according to Schneiderman’s office.

The Trump administration’s announcement late Thursday that it will halt the subsidies threatens to throw the individual insurance market into turmoil. The state attorneys general are seeking a temporary restraining order that would require the government to continue making these payments going forward, including the next one due Oct. 18.

As Schneiderman pointed out, the Washington, D.C. district court judge overseeing a separate, related lawsuit—House vs. Price—acknowledged that the loss of these payments would directly lead to an increase in premiums and in the number of insured individuals nationwide. He and other state attorneys general were permitted to intervene in that case this summer in what Schneiderman said was a recognition on that judge’s part that she “could no longer rely on the Trump administration to provide proper defense for the Affordable Care Act.” That case has been on pause as the new administration and the House GOP decided on a new way forward.

Though Trump hasn’t been shy about his desire to watch Obamacare “implode,” Schneiderman said the president’s willingness to take such significant steps to undermine the law “with no warning or even a plan to contain the fallout is breathtakingly reckless.”

Massachusetts, Connecticut and Kentucky are among the states joining New York and California in the lawsuit.

These states all have Democratic attorneys general, but a number of Republican lawmakers on Friday expressed grave concern about what will happen to residents in their states when these payments are gone—something that could happen as early as next week.

Update: The lawsuit the attorneys general are bringing has been filed in the U.S. District Court of California for the Northern District. It alleges that Trump is in violation of the Affordable Care Act, Administrative Procedure Act and the Constitution’s Take Care clause. Nineteen states are on the lawsuit. Read the lawsuit below:

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