Court ruling may stop Trump from cutting off ACA insurer subsidies

The U.S. Court of Appeals for the District of Columbia Circuit has allowed 16 state attorneys general to intervene in a lawsuit surrounding the Affordable Care Act’s cost-sharing reduction subsidies, or CSRs, paid to insurers for lowering deductibles for low-income ACA enrollees.

The CSRs have been threatened thanks to a lawsuit filed by the House of Representatives against HHS during President Barack Obama’s term in office. The suit argued the payments to insurers were illegal because Congress never appropriated the money, and a district court judge ruled in favor of the House. With President Donald Trump in office, he has reportedly leaned toward ending the legal defense of the subsidies, meaning the district court ruling would stand and the payments would be cut off.

The appeals court ruling means the Trump administration may not be able to abandon the CSRs unilaterally, as judges agreed with the state attorneys general that HHS, under Secretary Tim Price, MD, may not be willing to defend the subsidies, even though it’s now the defendant in the Obama-era lawsuit. They also agreed that states would be harmed if the CSRs were cut off, as premiums and uncompensated care costs would rise.

“State-funded hospitals will suffer financially when they are unable to recoup costs from uninsured, indigent patients for whom federal law requires them to provide medical care,” the ruling said.

The uncertainty around the CSRs has been priced into 2018 rate requests by insurance companies. Blue Cross and Blue Shield of North Carolina spelled out the financial impact by filing two rates: a 22.9 percent average increase in premiums for 2018 if CSRs aren’t funded, and a 8.8 percent hike if they are funded. Cutting off the subsidies would actually raise federal healthcare spending by about $2.3 billion in 2018, as premium hikes by insurers would lead to more federal consumer subsidies for buying ACA plans.

The court decision was praised by New York Attorney General Eric Schneiderman, one of the leaders of the state coalition.

“It's disturbingly clear that President Trump and his administration are willing to treat them as political pawns, but this coalition of attorneys general stands ready to defend these vital subsidies and the quality, affordable health care they ensure for millions of families across the country,” he said in a statement.