Arguing that the courts have no power to order the federal government to pay subsidies to sellers of health insurance under the Affordable Care Act, the Trump Administration urged a federal judge in California on Friday not to attempt such a step.
At the same time, however, government lawyers suggested that states and the insurance companies involved might be given access to courts other than the one in California to try to make the case for payment of the subsidies that President Trump has just cut off because he contends they are unconstitutional.
In recent days, there have been efforts in Congress to revive in some way the subsidies to insurance companies, but there are doubts whether that will succeed. That puts added emphasis on whether the federal courts will take action to restore the payments.
In its new 44-page legal brief filed in a federal trial court in San Francisco, the Administration’s lawyers focused most heavily on the argument that the only way that ACA subsidies to insurance companies could now be paid, and be valid under the Constitution, would be for Congress to explicitly pass a new law authorizing the funds to cover those payments.
The government takes the view that Congress did not do that in originally passing the ACA in 2010 and has not done so since, but that argument is being vigorously contested in the California case being pursued by 18 states and the local government in Washington, D.C.
That lawsuit, filed last week, sought to open up a second legal front in an attempt by state governments to force the continued payment of the so-called “cost-sharing reduction” payments, which had been running at $600 million a month until the president blocked further payouts. Most of the states involved in the new, and fast-moving, case in the court of U.S. District Judge Vince Chhabria in San Francisco have entered into an earlier case that is still pending in a federal appeals court in Washington, D.C., the U.S. Court of Appeals for the District of Columbia Circuit.
One of the Trump legal team’s arguments against continuation of the California case is that the challenging states do not have a legal right to be pursuing their same complaint in two different federal courts. The California lawsuit is “duplicative,” the brief argued, because the two cases have the same facts, claim violations of the same rights, and depend on the same legal arguments.
Basically, the Administration tried to persuade Judge Chhabria simply to dismiss the case in his court, arguing that the states have no way to win it on the claim that Congress has already put up the money for the payments, that the states cannot show that they are directly harmed by the government’s cutoff of payments to the insurers, and that the states cannot sue the federal government in an attempt to protect their citizens from perhaps harmful consequences from the cutoff of the subsidies to insurers.
But, the new brief argued that, if the judge does not dismiss the California case outright, at a minimum he should transfer it to the D.C. Circuit Court. The government lawyers suggested several possible maneuvers the states’ lawyers could take to try to get the payments revived by that appeals court – although noting that the government would resist because of its view that the payments are not constitutional.
The case now pending in the Washington tribunal was originally filed against the Obama Administration by the U.S. House of Representatives, contending that the government was making the insurance company subsidy payments without authorization by Congress. That argument was successful in a federal trial court in Washington, but that victory for the House has been on hold while the Obama Administration appealed to the D.C. Circuit Court.
The only action in that Circuit Court case recently was that it decided to allow a group of states to step into the case, to take the place of the Obama Administration in defending the insurance company subsidies because the Trump Administration was moving to abandon the appeal and stop the payments.
One other option the new government brief put forth was that the states involved in the case in Washington could ask the D.C. Circuit Court to send the case back to the federal trial court there, so that the states could start anew to defend the subsidies against the Trump Administration, thus getting the House out of the case and avoiding the question of whether the lawmakers had a right to sue in the first place.
While the government attorneys disputed the states’ claims that ending the insurance company subsidies would mean that low-income people will lose insurance and insurance companies will stop selling health coverage to them or will raise their premiums significantly, the brief argued that the states are not in a position to use the courts to try to protect the insurance companies’ interest in those payments.
The brief noted that there is also a special federal court, the Court of Federal Claims, that handles lawsuits in which someone can claim that the government is not paying what they are owed. The brief argued that the insurance companies themselves could try to persuade that court to require the government to revive the payments. Some insurance companies already have sued in that court in a separate dispute over money they claim they are owed under the ACA, the brief noted.
In any event, the government urged Judge Chhabria to act quickly, whatever steps he takes. If he is going to move forward and decide that the states are entitled to sue and that the government must make the payments, any such ruling should be as narrow as possible, it argued.
The judge should take steps to allow the government to appeal any ruling against it, and do so quickly enough that the appeal process could be finished by December.
The brief contended that, although the government does not intend to make any such payments for October and November, it would be able to make the payments retroactively if it ultimately loses the constitutional fight over them.
The payments at issue are designed to keep health insurance available at lower cost to lower-income people who buy policies on the state-by-state insurance marketplaces (“exchanges”) set up by the ACA. Insurers absorb the co-pays and higher deductibles that lower-income people otherwise would have to pay for their coverage, and then the companies get reimbursed by the federal government.
That is one of two subsidies the ACA created to help lower-income people afford health insurance. The other provides them with a tax credit, to offset the cost of insurance premiums. .
There is no dispute that Congress had approved federal funds to cover the tax credits.