The move to cut off the payments _ known as cost-sharing reduction, or CSR, payments _ drew swift condemnation from congressional Democrats and consumer advocates across the country.
There is widespread agreement that the move will lead to higher premiums, a potential exodus of insurers from the Obamacare markets and add nearly $200 billion to the federal deficit.
US President Donald Trump on Thursday signed an order to make it easier for Americans to buy bare-bones health insurance plans, using his presidential powers to undermine Obamacare after fellow Republicans in Congress failed to repeal the 2010 law.
The Trump administration has continued to make the payments, though the president has repeatedly threatened to cut them off, calling them a "bailout".
The CSRs help low-income people afford co-pays, deductibles and other out-of-pocket costs associated with health insurance policies. So when premiums rise, the subsidies rise in tandem.
Meanwhile, a nationwide survey revealed in September that the United States public favors Obamacare over the Republican Graham-Cassidy healthcare proposal by a 23-point margin.
But those who get no subsidies are exposed to the full brunt of cost increases that could reach well into the double digits in many states next year.
In a joint statement, House Minority Leader Nancy Pelosi and Senate Minority Leader Chuck Schumer said the move will increase premiums for Americans by roughly 20 percent or more. The association health plans could attract young, healthy people and leave a sicker, more expensive patient pool in the individual insurance markets created under Obamacare, driving up premiums.
Ending the payments, which cost about $7billion total this year, was one of Trump's campaign promises before he was elected in 2016.
House Republicans opposed to the health law sued then-President Barack Obama, saying the payments were illegal because Congress hadn't appropriated money for them.
A judge for the federal district court for the District of Columbia ruled in favor of the Republicans, and the Obama administration appealed the ruling. He repeated that characterization on Twitter Friday.
The White House cited that legal dispute when it announced the end of the payments late Thursday.
The Trump administration rule also eliminates restrictions on short-term health insurance plans, which offer limited benefits and are intended as a stopgap between jobs.
The order allows for a broader interpretation of the Employee Retirement Income Security Act (ERISA), which could, according to a White House statement, "potentially allow employers in the same line of business anywhere in the country to join together to offer health care coverage to their employees", in addition to expanding coverage through short-term and low-priced limited duration insurance (STLDI).
Trump's order weakens Obamacare in part by giving people more access to plans that do not cover essential health benefits such as maternity and newborn care, prescription drugs, and mental health and addiction treatment.