Trump's healthcare plan focuses on direct payments over insurance subsidies

By Ahmed Aboulenein and Amina Niasse

WASHINGTON, Jan 15 (Reuters) - U.S. President Donald Trump said on Thursday he plans to replace government subsidies for health insurance with direct payments to consumers, an idea that some experts have said would hurt lower-income Americans.

Trump's announcement comes as millions of Americans face higher healthcare costs this year after Congress allowed generous COVID-19-era tax credits for federally subsidized Obamacare plans to expire. Open enrollment for most plans closes on Thursday.

In a single-page proposal short on detail, the White House outlined a proposal to Congress it said would lower drug prices and insurance premiums, make costs more transparent, and hold insurance companies accountable.

LEGISLATION UNLIKELY TO PASS QUICKLY

It did not provide a timeline for implementation, but a deeply divided Congress is unlikely to pass major healthcare legislation quickly, though Trump called on it to do so "without delay" in a video posted alongside the plan.

The government will put extra money in consumers' accounts, Trump said, adding, "You go out and buy your own healthcare."

Critics say replacing subsidies with direct payments could force lower-income Americans to shift toward less comprehensive plans sold outside of former President Barack Obama's signature Affordable Care Act. That law sought to put all Americans - both healthy and sick - in one marketplace to keep premiums down.

The insurance industry's main trade group AHIP welcomed the plan, and CVS Health CVS.N, owner of insurer Aetna, said it was committed to making healthcare more affordable.

Shares of CVS, Cigna CI.N, and UnitedHealth UNH.N were up in afternoon trading by about 2%.

QUESTIONS ABOUT OBAMACARE REMAIN

The Trump administration expects the plan to receive bipartisan support in Congress, a senior White House official told reporters, an assessment disputed by analysts and contradicted by reactions from congressional Democrats.

"I don't think this is going to get Democratic votes. I think this would be dead on arrival, at least on its surface," said Cynthia Cox, senior vice president at KFF, a health policy research, polling and news organization.

"If this is as far as the Trump administration is willing to go, then that's likely to mean that the enhanced premium tax credits continue to expire as they already have, and that there's no replacement for them," said Cox.

Republican Senate Majority Leader John Thune spoke favorably of the plan but did not outright endorse it, saying he had not looked at its details. Senator Ron Wyden, the top Democrat on the Finance Committee, said the plan was the latest of Trump's "empty promises" to lower healthcare costs but did not address its details directly.

Congress remains divided on whether and how it should reinstate the enhanced Obamacare tax credits it allowed to expire.

CALLS FOR CONGRESS TO PASS DRUG PRICING LAW

Trump's plan also calls on Congress to codify his most-favored-nation drug price deals, and aims to make more medicines available for over-the-counter purchase.

Trump has been pressuring drugmakers to lower their prices to what patients pay in similarly wealthy nations and has struck deals with 14 drugmakers on prices of some of their medicines for the government's Medicaid program for low-income Americans and for cash payers.

The plan also targets pharmacy benefit managers, the industry middlemen who negotiate drug prices for employers and health plans.