President Donald Trump’s administration asked for another 90 days to resolve a lawsuit over subsidies that help poorer people afford to use their Obamacare insurance plans, further delaying a long-running legal fight that’s already destabilizing the health law.
The U.S. Department of Justice and House Republicans made the joint request Monday as they “continue to discuss measures that would obviate the need for judicial determination of this appeal, including potential legislative action,” such as the Obamacare replacement plan known as the American Health Care Act, according to a court filing.
Without the payments, insurers have threatened to drop out of the Affordable Care Act’s markets or substantially raise premiums, and customers could face thousands of dollars in unexpected costs. The Trump administration could still choose to drop the appeal, though other parties are trying to defend the payments.
“We are weighing our options and still evaluating the issues,” Alleigh Marre, a spokeswoman for the Department of Health & Human Services, said in a statement. “Congress could resolve any uncertainty about the payments by passing the AHCA and reforming Obamacare’s failed funding structure.”
State officials, the health industry and Democrats in Congress have pushed for the payments to continue, saying that ending them would upend the insurance market and cost millions of people their health insurance.
Small Reprieve
“We need swift action and long-term certainty on this critical program,” Cathryn Donaldson, a spokeswoman for America’s Health Insurance Plans, said in an email. “It is the single most destabilizing factor in the individual market, and millions of Americans could soon feel the impact of fewer choices, higher costs, and reduced access to care.” The group is one of the main lobbying associations for health insurers.
While the latest delay is a reprieve for Obamacare, it does little to resolve the underlying uncertainty created by the case and by Republican efforts in Congress to repeal and replace large parts of the law. Health insurers are in the midst of deciding whether to participate in the Affordable Care Act next year, and what to charge customers. Some have already said they’ll raise premiums in 2018 because of uncertainty around the subsidies.
The dispute began in 2014 when House Republicans sued the Obama administration, saying the payments couldn’t be made without Congress’s approval. House Republicans won the case in district court, and the Obama administration appealed. The Trump administration has threatened to drop the appeal.
Attorneys general from New York, California, 13 more states and the District of Columbia last week asked the appellate court for permission to intervene in defense of the payments, interruption of which “would directly subvert the ACA, injuring states, consumers and the entire health-care system,” they said then.
The judges have not yet acted on that request. On Monday, New York Attorney General Eric Schneiderman accused the administration of playing “a cynical political game” with Americans’ health care, by using the cost-sharing reductions as a “political negotiating tool.” In a statement issued after the court filing, he said the tactic was destabilizing the market.
Insurance Markets Threatened
The funds, paid directly to insurers each month, are estimated to total about $7.35 billion in 2017, according to the Commonwealth Fund. About 7.1 million of the 12.2 million people who signed up for ACA plans for 2017 were eligible for the extra help. The cost-sharing reduction, or CSR, payments are separate from Obamacare’s other income-based subsidies to help individuals afford their insurance premiums.
House Democratic Leader Nancy Pelosi, of California, criticized the threats to stop the payments.
“Republicans cynically continue to sow uncertainty in the health coverage of millions of Americans,” Pelosi said in a statement. “At a critical period when insurers are deciding premiums for next year, Republicans are pouring uncertainty into the health insurance marketplaces.”
Trump previously threatened to use the CSR payments as a bargaining chip to bring Democrats to the table on health care if Republicans can’t muster enough repeal votes in the Senate. He also tried to use them as leverage to gain funding for a border wall with Mexico, saying he’d give Democrats a dollar in CSR money for every dollar for the wall.
Immediate Pullout?
While Congress passed a measure to fund the government through September -- without funding for the wall, or the CSRs -- there could be another clash when Congress takes up a spending measure for fiscal 2018 in September.
If the payments are cut off, some insurers might end their insurance plans immediately. Molina Healthcare Inc., which insures about 1 million people in Obamacare, said in an April 27 letter that it would immediately withdraw health plans that included the subsidy, and wouldn’t sell Obamacare plans next year.
“Unless CSRs are funded, a tremendous number of Americans will simply go without coverage and move to the ranks of the uninsured,” an industry coalition including insurers, doctors, hospitals and businesses said in a May 19 letter to the Senate. “This threatens not just their own health and financial stability, but also the economic stability of their communities.”
Plans might also decide to boost their premiums to make up for the shortfall. The Kaiser Family Foundation found that insurers would need to raise premiums for mid-level “silver” plans roughly 19 percent, though the amount varies widely among states. Some of the hardest hit states would be Republican-leaning ones that didn’t expand Medicaid under the law, because they have more low-income people enrolled in Obamacare plans, Kaiser found.
There could be unintended consequences, as well. If insurers raised their premiums, it might actually cause U.S. spending on Obamacare to rise, rather than fall, because Obamacare’s main subsidies are based on how much premiums cost.
The case is U.S. House of Representatives v. Price, 16-5202, U.S. Court of Appeals, District of Columbia Circuit (Washington).
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