Senators have moved to salvage Obamacare following Donald Trump’s decision last week to scrap critical subsidies that underpin the health law.

Republican senator Lamar Alexander announced on Tuesday that he had reached a deal with Democrat Patty Murray to fund the federal payments – intended to help insurance companies cover the medical needs of low-income Americans – in exchange for allowing states more regulatory flexibility under the Affordable Care Act.

The president – who last week announced he was ending the subsidies to insurance companies while claiming the ACA was “imploding” – said he approved of the plan and that the White House had been involved in the negotiations.

“It is a short-term solution so that we don’t have this very dangerous little period,” Trump said, “and it will get us over this intermediate hump.”

Trump has given mixed messages over his motivation for ending the subsidies, which the White House argues were unlawful.

Democrats have accused him of scrapping them to “sabotage” Barack Obama’s signature healthcare law following repeated failed attempts by Republicans to repeal it, and the president’s former chief strategist Steve Bannon has praised him because the decision is “gonna blow that thing [Obamacare] up”.

On Monday Trump appeared to back this interpretation, telling reporters: “Obamacare is finished. It’s dead. It’s gone. You shouldn’t even mention it. It’s gone. There is no such thing as Obamacare any more.”

And on Saturday, in an unusual move for a president, he celebrated a fall in the value of insurance company stocks following his decision to end the payments.

“Health Insurance stocks, which have gone through the roof during the ObamaCare years, plunged yesterday after I ended their Dems windfall!” he tweeted on Saturday.

But Trump has also expressed approval that his actions were prompting Congress to discuss the issue of the subsidies. “Republicans are meeting with Democrats because of what I did with the CSR, because I cut off the gravy train,” he said on Monday. “If I didn’t cut the CSRs, they wouldn’t be meeting. They’d be having lunch and enjoying themselves, all right?”

This echoed a tweet on Friday suggesting the move had been a bargaining chip. “Massive subsidy payments to their pet insurance companies has stopped,” Trump wrote. “Dems should call me to fix!”

But Alexander and Murray had already been engaged in negotiations long before Trump catapulted the insurance market into potential chaos by abruptly pulling the subsidies.

A hurdle

Alexander, chairman of the Senate health committee, told reporters on Capitol Hill he was “encouraged by the consensus of support … including from President Trump,” but cautioned that reaching a deal was only the first hurdle in what could be a protracted process. The Tennessee Republican said there was more work to be done, but hoped the measure would draw bipartisan support.

The Democratic Senate minority leader, Chuck Schumer, called the deal a “very good step forward” which had received “broad support” among his party, and urged Mitch McConnell, his GOP counterpart, to bring the bill to the floor for a vote.

Trump’s decision to embrace a deal to continue the payments underscores the challenge facing Republicans amid the party’s failed efforts to act upon a seven-year pledge to repeal and replace Obama’s healthcare law, which extended insurance coverage to about 20 million people.



The uncertainty over the Affordable Care Act’s future, and specifically over the so-called “cost-sharing reduction” payments, has been cited by some major insurers as part of the reason why they were compelled to pull out of the marketplace established under the law. Failing to make the payments could result in soaring costs for millions of Americans by forcing insurers to increase premiums, and in some cases lead policyholders to drop coverage altogether.

McConnell called the deal a “hot news item” during a weekly press conference with reporters. He said the leadership team had not had time to “think about a way forward yet”.

It remains unclear whether Republicans will have the votes to pass a bill that conservative hardliners have dubbed an “Obamacare bailout”.

Trump insisted on Tuesday that he remained committed to dismantling the ACA and would urge Republicans in Congress to revisit the issue of healthcare after advancing a tax reform bill.



“Obamacare is a disaster. It’s virtually dead as far as I’m concerned,” Trump said, while vowing to push ahead with a Republican plan that would transform federal funding provided under the ACA into block grants controlled by the states.

The latter proposal, sponsored by the Republican senators Lindsey Graham and Bill Cassidy, failed to garner sufficient support from the GOP last month before even reaching the Senate floor for a vote. Trump nonetheless claimed on Tuesday that Republicans had the votes to move forward, despite there being no indication of that being the case.

Last week, just before removing the subsidies, the president took action to unilaterally weaken the ACA by signing an executive order aimed at expanding access to cheaper and less comprehensive insurance. As Trump hailed his decision as a meaningful step toward undercutting the ACA, critics suggested the move would enable insurers to skirt coverage requirements for basic health benefits such as maternity care and prescription drugs.

Negotiations between the senators began last month but progress stalled when Republicans attempted to revive a plan to repeal the Affordable Care Act. That plan failed to gain enough traction, prompting Trump to take executive action to unwind the law.

They had initially hoped to reach an agreement ahead of the deadline for insurance companies to finalize their rates for the year. That did not happen, and insurance companies have largely raised premiums for 2018.

Meanwhile, Republicans are facing an extremely narrow path to approving a budget resolution, a critical step toward fulfilling their promise to overhaul the tax system.

The Senate voted on Tuesday to open debate on the proposal after Trump helped sway Rand Paul, a fiscal hawk from Kentucky, to allow a discussion to move forward. In a call with reporters later in the day, Paul said he would not support the budget unless it shaved $43m in defense spending, a priority for his Senate colleagues John McCain and Lindsey Graham.

Graham warned that if the party doesn’t make good on its promises on tax, it will lose its majorities come next election.

“Here’s the one thing I’ve told every Republican including the president: we’re going to succeed together or we’re going to fail together,” Graham said. “If we don’t cut taxes after all these years of promising, then I think the party comes unraveled.”