The Trump administration decided to once again delay the day of reckoning for cost-sharing-reductions, which cost the government about $7 billion last year. The payments, which go to insurers that cover individuals and families earning up to 250% of the poverty line, reduce co-pays and deductibles for those customers.
Monday, the Trump administration asked the appeals court for the District of Columbia to hold the case in abeyance for another 90 days.
At issue is whether the administration has the authority to pay the money without an appropriation from Congress. House Republicans sued the Obama administration, saying it was an unconstitutional usurption of power to make the payments. A federal judge agreed a year ago and the Obama administration appealed.
The House of Representatives could preserve the individual market by appropriating the funds, but has declined to do so. Eight lobbying organizations—for hospitals, doctors, insurers and employers—have asked Congress repeatedly to authorize the spending, and did so again on Friday.
“The lack of clarity around CSR payments has led several insurers to conclude that they cannot participate for 2018. Those who will participate were responding to the market uncertainty with premium requests that are as much as 60% higher than last year,” the letter said. “Congress must take action now to fund CSR payments,” the letter concluded.
If the Trump administration dropped the appeal, the payments would immediately cease, but the Affordable Care Act requires insurers to offer the low deductibles and co-payments to customers who qualify, whether the insurers are paid or not. Some insurers’ contracts allow them to immediately exit in those circumstances; others would have to exit because the lack of CSR support would make them insolvent.
However, if states were allowed to intervene—and 15 states asked to do so last week—that could change the outcome. University of Michigan Law Professor Nicholas Bagley wrote an analysis Monday that states are betting that the appellate court would disagree with the lower court’s finding that the House of Representatives had standing to sue.
But Bagley, who used to work in the appellate division of the Department of Justice, said without appropriations from Congress, there would still be uncertainty, as the appellate court could affirm the lower court’s ruling.
“Still, insurers could breathe a bit easier,” he wrote at the Incidental Economist. “If the states are allowed to intervene, Trump couldn’t blow up the individual markets in a fit of pique.”