WASHINGTON - The White House announced on Thursday it will end subsidies to health insurance companies that help lower out-of-pocket costs for low-income customers, another move intended to unravel the Affordable Care Act, aka Obamacare.

"Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare," the White House said in a statement.

"In light of this analysis, the government cannot lawfully make the cost-sharing reduction payments," it said.

The plan came hours after President Donald Trump signed a healthcare executive order that could lead to sweeping changes in the country's healthcare system, with proposals for cheaper, bare-bone health insurance plans by circumventing Obamacare rules.

"The United States House of Representatives sued the previous administration in federal court for making these payments without such an appropriation, and the court agreed that the payments were not lawful," the statement said.

The White House blasted the bailout of insurance companies through these payments as "another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system".

It also urged Congress to "repeal and replace the disastrous Obamacare law and provide real relief to the American people".

Analysts said the absence of the subsidies could quickly send insurance markets into turmoil as the administration's measures to push for healthcare reform are expected to drive up insurance premiums and cause a massive fleeing from the marketplace by insurance companies.

Top Democratic leaders, Senator Chuck Schumer of New York and Representative Nancy Pelosi of California, said in a joint statement that Trump had "apparently decided to punish the American people for his inability to improve our healthcare system".

"It is a spiteful act of vast, pointless sabotage leveled at working families and the middle class in every corner of America. Make no mistake about it, Trump will try to blame the Affordable Care Act, but this will fall on his back and he will pay the price for it," they said.

But House Speaker Paul Ryan said the White House proposal "preserves a monumental affirmation of Congress' authority and the separation of powers".

"Obamacare has proved itself to be a fatally flawed law, and the House will continue to work with Trump administration to provide the American people a better system," the Republican congressman said.

Earlier that day, Trump signed an executive order to gut Obamacare after the GOP-controlled Congress' repeated failure to get it repealed or replaced, a decision strongly opposed by Democrats.

Xinhua - Reuters