A group of 15 states plus Washington, D.C., moved on Thursday to try to head off what they called a “death spiral” for the health insurance law still in operation from the Obama Administration. They filed court papers to defend billions of dollars in subsidies that continue to be paid to health insurance companies to help reduce the costs of coverage for lower income people.
President Trump and other Administration officials have said several times that they would not continue to support those cost subsidies, and made clear their desire that the cutoff of those payments would help scuttle the Affordable Care Act’s basic financial mechanisms.
Under a new health care bill passed by the House and awaiting an uncertain fate in the Senate, these cost subsidies would end, but not for another three years. In this year alone, those payments are expected to total $9 billion, and are predicted to rise – if they continue — to $16 billion by 2026.
The forum for the move by the states and the city government of the nation’s capital to defend the payments to insurers is the U.S. Court of Appeals for the District of Columbia Circuit, which had put on hold temporarily a constitutional lawsuit over the fate of those payments. The lawsuit was filed by Republican leaders of the U.S. House of Representatives, and their challenge won in a federal trial court. The federal judge ruled that the Obama Administration was spending money for those cost subsidies without congressional approval of the funds – a constitutional necessity.
The Obama Administration, contending that the ACA itself provided the authority to make those payments, appealed to the Circuit Court, challenging the House not only on the funding issue, but also on the basic constitutional question of whether the House had the authority even to file its lawsuit on the issue.
The election of President Trump in November has put the future of the subsidy system in deep doubt. That prospect is what led the states and D.C., which have not been involved in the case up to now, to try to step in as the legal defender of the subsidies. Their legal papers noted that they can no longer count on the new Trump government to provide a defense for a program in which the states said they have a vital interest.
Under the ACA, the states manage the health insurance marketplaces (“exchanges”), and have a keen interest in making sure that millions of their residents do not lose health insurance coverage because the premiums rise too greatly.
Under the ACA, there have been two mechanisms to help people of low or modest income to be able to buy health insurance on the state-operated “exchanges.” One was a system of direct subsidies to consumers seeking insurance on the exchanges. That is not at issue in the current case.
The other was a system of payments directly to insurance companies to induce them to reduce the costs that consumers might have to pay – such as co-pays or higher deductibles – for the coverage they obtain on the exchanges.
In the new motion to enter the case, the states and D.C. argued that a loss of the subsidies to the insurance companies “threatens catastrophic harm to the states themselves, to the health insurance markets they regulate and administer, and to their residents who rely on those markets to obtain affordable insurance vital to their continued health and well-being.”
Without the subsidies, the motion said, insurance companies will walk away from the markets or raise their premiums so high that many lower income people will simply have to give up their coverage. Insurance companies need some assurance, within the next few weeks, about the fate of the subsidies as they make plans on whether they will provide policies in the next year, the document said.
Because of the election last November, the filing said, the House and the Trump Administration “appear ready to allow” the federal judge’s ruling to stand, without giving the Circuit Court “the opportunity to determine” either the question of the House’s legal right to sue or the legality of the funding “that Congress intended to provide.”
Letting the 15 states and D.C. enter the case, the motion said, “would give this court a set of parties willing and able to present a competing view on the important legal issues that require this court’s review.”
Since December, the Circuit Court has twice put the case on hold while the Trump Administration and the House decided what their legal position would now be on it. They are due to give the Circuit Court an updated status report on Monday.
