Subsidies...

Trump wants subsidies for coal companies, not health insurers

Analysis by Z. Byron Wolf

Here are two headlines from recent weeks that don't share a specific link, but tell you a lot about what's going with the federal government right now.

* Trump will end health care cost-sharing subsidies -- CNN Politics, October 13

* Subsidy plan for coal and nuclear plants 'will cost US taxpayers $10.6bn a year' -- The Guardian, October 27

What do coal companies have to do with health insurance companies? Not subsidies, apparently. Both of the stories above are worth a read. And both subsidies have arguments on either side.

But there is a clear and undeniable disconnect on the idea of government bailouts. It's OK for the government to subsidize coal power, but not for the government to subsidize insurers providing health coverage. Trump has said Obamacare is failing — according to Trump — his efforts to sabotage it notwithstanding.

The coal industry, which represents a shrinking share of US energy production, however, is worthy of government help, according to Energy Secretary Rick Perry.

The Guardian story documents a Department of Energy proposal to enact a new rule to compensate coal and nuclear energy companies for stabilizing the power grid.

From the Guardian: "The Department of Energy has proposed that coal and nuclear plants be compensated not only for the electricity they produce but also for the reliability they provide to the grid. The new rule would provide payments to facilities that store fuel on-site for 90 days or more because they are 'indispensable for our economic and national security.'"

It goes on to detail a nonpartisan analysis suggesting the rule would benefit a handful of companies to the tune of $10.6 billion over 10 years. Whether the electric grid needs the stability of coal and nuclear plants is up for debate. The proposal still has to be approved by the Federal Energy Regulatory Commission. But it's clear that issuing these payments to coal companies is OK with the administration.

President Donald Trump has vowed to help protect the coal industry and coal miners, an important political constituency for him. In March, he signed an executive order rolling back Obama-era restrictions on the industry and, surrounded by coal miners, promised to bring coal jobs back.

Perry, meanwhile, defending his proposal to subsidize coal companies for their contributions to energy stability, said this month that the idea of a free market for energy is a "fallacy."

"I think the idea that there is a free market in electrical generation, it's not a bit of a fallacy, it is a fallacy," he told lawmakers on October 12.

Supporters of more government involvement in health insurance would use the same argument about health care.

The health insurer subsidies — cost-sharing reducton payments — that Trump ended earlier this month are meant to help companies pay for insuring the poor. They are much more expensive than the energy subsidies -- up to $7 billion in one year. They are meant to prop up the individual insurance markets set up by Obamacare, which Trump has vowed to dismantle.

His axing of the subsidies has been framed more as a negotiating tactic than a cost-saving measure, however. Trump says the payments aren't actually legal under the law, so he's cutting them, knowingly throwing the market set up under Obamacare into limbo.

"What it's going to do is it's going to be time to negotiate health care that's going to be good for everybody," Trump told reporters October 13. "That money is a subsidy for insurance companies.

Take a look at their stocks. Look where they are. They're going through the roof, from past -- I don't know about today. But the insurance companies that made a fortune, that money was a subsidy and almost, you could say, a payoff for insurance companies."

These issues obviously have very little to do with each other, but it is important to note that the idea of subsidies is clearly not universally abhorred in the Trump administration.