National Constitution Center

10/13/2017 | News release | Distributed by Public on 10/13/2017 06:53

Legal fight set after Trump pulls Obamacare subsidies

President Donald Trump's decision to stop cost-sharing payments to insurers in the Obamacare marketplace seems headed for a court date in the near future.

On Thursday night, White House Press Secretary Sarah Huckabee Sanders released a statement confirming rumors about the move. '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,' Sanders said.

At stake are $7 billion in annual cost-sharing payments that compensate insurers for offering reduced-price plans to low-income health plan members.

New York state attorney general Eric Schneiderman said his state would sue the Trump administration after the move. 'I will not allow President Trump to once again use New York families as political pawns in his dangerous, partisan campaign to eviscerate the Affordable Care Act at any cost,' he said in a statement.

Eric Schneiderman and California attorney general Xavier Beccera are fighting the move on behalf of 18 states. And there is a live case in the federal court system related to the matter.

In August, a federal panel of judges in the United States Court of Appeals for the District of Columbia granted the 18 states standing to contest the non-payments in a case called House v. Price.

As part of that order, the three federal judges had doubts that the payments could be suspended. 'The [Health and Human Services] Department's claim that it could unilaterally suspend payments is a debated legal question, not an answer to the injury the States have evidenced. The injunction sought, which would forbid the payments at issue, would erect a roadblock to the States' goal of either persuading or compelling the Department to make the payments; that is sufficient impairment,' they said.

The original dispute was between the Republican-controlled House of Representatives and the Obama administration, and a federal district judge first ruled in favor of the House, which didn't want to appropriate the funds for the payments. The 18 states sued to take the place of the Obama administration so the lawsuit could be pursued.

Scholar Timothy Jost explained the legal situation in a blog post written just after the court decision in August.

'The [August court] decision does not mean that the Trump administration is barred from ending the cost-sharing reduction payments. It does mean, however, that the administration cannot unilaterally stop the CSR payments, dismiss the appeal, and claim judicial imprimatur for its doing so,' Jost said.

He concluded that the 18 states would have a chance to make a final argument at some point. 'If the states ultimately convince the appellate court that the CSR funding has in fact been appropriated, the administration would be required to pay it. The decision is, therefore, a major development in the ongoing CSR saga,' Jost said.

Scott Bomboy is editor in chief of the National Constitution Center.