Judge Rejects Bid to Revive ACA Subsidies

A federal judge has denied several states’ attempt to compel the Trump administration to continue paying cost-sharing reduction payments. Attorney generals from 18 states and the District of Columbia had filed a motion in the U.S. District Court seeking a temporary injunction that would reinstate the payments, which the administration decided to end earlier this month.

Judge Vince Chhabria was skeptical of the states’ argument during a hearing on the motion earlier this week, noting many states have already taken steps to diffuse the impact of CSR uncertainty. In his order denying the states’ request for a temporary injunction, Chhabria said although a federal judge did previously rule that CSR payments should end because they were not properly appropriated by Congress, in this instance, the Trump administration has the stronger legal argument. Chhabria also noted any emergency relief requested by the states would be counterproductive as state insurance regulators have been working for months to prepare for the possibility the subsidies would end.

Many states, he continued, have therefore “devised responses that give millions of lower-income people better health coverage options than they would otherwise have had.”

The Trump administration this month terminated the payments to the insurers, which help cover medical expenses for low-income Americans, as part of several moves to dismantle Obama’s signature healthcare law formally known as the Affordable Care Act. The subsidies were due to cost $7 billion this year and were estimated at $10 billion for 2018, according to congressional analysts.

Insurers have argued they do not profit from the subsidies under the Affordable Care Act, but pass them on directly to consumers to reduce deductibles, co-payments and other out-of-pocket medical expenses for low-income people. Because insurers would raise premiums on policies in the absence of the subsidies, the government would be compelled to spend more on financial assistance to low-income Americans. The Congressional Budget Office has found that a bipartisan Senate proposal to shore up Obamacare insurance marketplaces by reviving the subsidies would cut the U.S. deficit by $3.8 billion over the next decade.