Jayne O'Donnell, Herb Jackson and Richard Wolf, USA TODAY

The federal government will still pay higher premiums for millions of lower-income people after President Trump's decision late Thursday to stop paying subsidies to insurance companies, which help cut premiums for Americans who make too much to qualify for other assistance.

Under the Affordable Care Act, individuals and families earning less than four times the federal poverty limit receive help paying for their health insurance. People who make more than that receive no financial help from the government, but their health insurance costs were offset by a separate class of cost-sharing subsidies the government paid to insurance companies.

It is those cost-sharing subsidies that Trump announced the government would stop paying. Without that money, insurers have announced higher rates that will be paid by Americans who don't qualify for the other subsidies, health care experts say.

"The two potentially vulnerable groups here are those who are in counties where insurers may pull out as a result of this action, and those not eligible for subsidies to help them pay the higher premiums," says Larry Levitt, senior vice president of the Kaiser Family Foundation.

Trump's move is widely seen as his most significant one yet to undermine the ACA, which the Republican-led Congress and Trump have so far failed to repeal and replace.

It came just hours after he signed an executive order that would give these higher-income people who buy their own insurance the option of buying cheaper and less comprehensive insurance. But that action requires federal rules, which would take several months to enact and may not take effect until the open enrollment period in November 2019.

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It's really just a different pool of federal funds that covers the higher rates. The subsidies people who earn less than $98,400 for a family of four receive to lower the cost of silver-level plans on the exchanges are pegged to the premium rates. That means as the rates rise, so do the credits, according to health policy analysts including Levitt and the Urban Institute.

The lost subsidies to insurers means the federal government would spend 18% more on premium subsidies for insurance customers than it would have spent on tax credits and cost-sharing subsidies combined, according to the Urban Institute. That would be another $7.2 billion in 2018, the Urban Institute said.

That means stopping the subsidies to insurers will actually cost the federal government money, not save it.

A bipartisan plan to fix subsidies

The White House said Thursday that its decision to stop paying the subsidies was based on a Justice Department determination that the payments were not appropriated by Congress. House Republicans made the same argument in 2014 when they sued the Obama administration.

Trump tweeted Friday that "Dems should call me to fix!" the imploding Obamacare. Rep. Josh Gottheimer, a New Jersey Democrat and chairman of the 40-member, bipartisan House Problem Solvers Caucus, said he already had.

“We’re ready to sit down and fix health care,” Gottheimer said. “This move will singlehandedly both increase the federal deficit by $200 billion and spike premiums by more than 20 percent in New Jersey next year.”

After a so-called “skinny repeal” bill failed to pass the Senate in July, the caucus released an outline to stabilize health insurance that members from both parties pledged to support.

Their plan included making the cost-sharing payments Trump is planning to eliminate mandatory.

Gottheimer and Rep. Tom Reed of New York, the Republican chairman of the group, have said their plan provided a foundation that Sens. Lamar Alexander, R-Tenn., and Patty Murray, D-Wash., were using to try to craft a bipartisan plan to stabilize health insurance.

Rep. Leonard Lance, a New Jersey Republican who voted against a House plan to repeal and replace the ACA, called on Trump to examine the bipartisan plan.

Lance said he has long believed the cost-sharing subsidies are unconstitutional, because they were not authorized and appropriated by Congress. But now, Lance said, Congress must pass the Problem Solvers Caucus plan, which would pay for the subsidies through the normal congressional appropriations process.

Lost subsidies included in higher rates

Insurers in most states assumed the subsidies would not be continued when they submitted their rates for 2018. That is why many of the rates jumped. But insurers did not factor in the lost subsidies in an estimated 14 states, according to David Anderson of Duke University's Margolis Center for Health Policy.

Without the subsidies, the average increase for the cost of premiums would be 23% for 2018 silver-level plans, and about 600,000 more people would sign up for insurance, according to an estimate by the Urban Institute.

Premiums are now locked in, so insurers that didn't price factoring in a loss of subsidies will face losses or some could drop out at a time when other insurers can't replace them.

Insurers all have premiums approved by states and have signed contracts with the states or the Department of Health and Human Services for states served by the federal Healthcare.gov.

"Insurers that haven’t built the loss of the subsidy payments into their premiums will likely scream bloody murder, and try to get permission to raise premiums or potentially exit the marketplace," Levitt says. With open enrollment starting Nov. 1, "There could be quite a bit of chaos over the next few weeks."

These subsidies have long been under fire.

House Republicans challenged them in federal court in 2014, charging that they were unconstitutional because Congress hadn't appropriated money for them.

Federal district court Judge Rosemary Collyer, a Republican appointee, ruled in Republicans’ favor last year. While the law provided for tax credits, she said, it did not authorize an appropriation for subsidies that reduce the cost of deductibles and copayments for many Americans.

“Congress authorized reduced cost-sharing but did not appropriate monies for it,” Collyer said in a 38-page ruling. “Congress is the only source for such an appropriation, and no public money can be spent without one.”

Collyer blocked the decision from taking effect until a ruling on the Obama administration’s appeal to the U.S. Court of Appeals for the District of Columbia Circuit, where it remains pending.

The Trump administration had asked that court to delay consideration of the case while it decided whether it would retain or discontinue the subsidies. In the meantime, the appeals court allowed a coalition of 16 state attorneys general — led by Democrats from New York and California — to intervene in the case. New York Attorney General Eric Schneiderman announced Friday that a multistate lawsuit, to be filed in California, will seek an emergency stay of the president’s action. The states contend the ACA relies on a permanent appropriation for tax credits that is sufficient to make the subsidy payments legal.

At the same time, the broader federal appeals court case will continue.

“We’re going to be fighting on every front,” Schneiderman said.