States Sue Trump Administration For Halting $7 Billion In Cost-Sharing Payments To Insurers

With a one-paragraph statement released late in the evening on Thursday, President Trump announced he was pulling the plug on $7 billion a year in payments from the federal government to insurance companies who sell individual policies through the exchanges set up by the Affordable Care Act. Today, at least five states say they are suing to keep these subsidies in place.

The monthly payments, known as cost-sharing subsidies, are part of the 2010 Affordable Care Act and are intended to keep out-of-pocket expenses — like co-pays and deductibles — low, particularly for Americans making between 100% and 250% of the federal poverty line.

Because the exact payments are not appropriated by Congress, President Trump has maintained that he has the authority to end them at any time.

However, some state attorneys general disagree that Trump can turn these payments off like a garden spigot, and are planning to file a lawsuit against the administration this afternoon in a California federal court.


UPDATE: The complaint has been filed and is now available HERE.

Canceling these subsidies, says California Attorney General Xavier Becerra, is a violation of the Administrative Procedures Act, the law that details how federal agencies do things like make, change, and repeal rules and regulations.

What’s more, these states argue, President Trump is violating the “Take Care” clause of the Constitution, which states that the President shall “take Care that the Laws be faithfully executed.”

Becerra and the other attorneys general involved in this suit contend that President Trump is violating the Take Care clause by deliberately going against the intent of the Affordable Care Act.

“It’s lost past time that President Trump learn he doesn’t get to pick and choose which laws he will follow,” said Becerra at a Friday morning press conference. He was joined by Kentucky Attorney General Andy Beshear, Attorney General Maura Healey of Massachusetts, and Connecticut AG George Jepsen, all of whom have signed on as plaintiffs in this case. New York is also part of this lawsuit, and it’s possible that other states could also sign on.


UPDATE: Per Becerra’s office, the states signing on to this lawsuit are currently California, Kentucky, Massachusetts, Connecticut, New York, Delaware, Maryland, Oregon, North Carolina, Illinois,Vermont, Pennsylvania, Rhode Island, Virginia, Minnesota, New Mexico, Washington, Iowa, and Washington, D.C.

“The government’s plan to stop paying subsidies will cripple healthcare here in Kentucky,” said Beshear in a statement, pointing out that 88,000 Kentuckians have coverage through the ACA exchange, but will likely see their health insurance costs rise at least 20%.

“These companies are going to pass on the costs of the federal government’s broken promises to you and me,” said Beshear. “And for so many Kentuckians, who are already struggling at the end of the month to pay the power bill and to pay for their healthcare, it’ll get that much harder if not impossible.”

The higher premiums and lack of subsidies, noted the AGs, won’t necessarily be felt by the lowest-income Americans, whose premiums are currently capped under the law. It’s the middle-class Americans who are purchasing insurance on their own — families that make too much money to qualify for the premium caps but not enough to afford the higher rate — that will likely be harmed the most, whether it’s because they have to overpay for coverage or go without insurance.

“This lawsuit isn’t about the president at all,” said Beshear, acknowledging that probably 70% of the Kentuckians that could be negatively affected by these cuts voted for Trump. “It’s about Kentuckians deserving healthcare that they can afford and the federal government keeping its word.”

At a later press conference, New York Attorney General Eric Schneiderman argued that the Trump administration is illegally disregarding existing statutes in order to “simply to blow up the system.”

“The Affordable Care Act is the law of the land” said Schneiderman, pointing out that the law has withstood multiple challenges before the Supreme Court. “We are not going to let the President destroy a system that has been providing for so many of our people.”

The suit being filed by the states is seeking a preliminary injunction that would bar the government from halting the payments pending the outcome of the case. It’s also seeking a declaratory judgment from the court that these payments are allowed by the Affordable Care Act. That second part might be a bit tricky, as these subsidies are also the subject of a separate, ongoing legal dispute involving their legality.

In 2014, Republican members of the House of Representatives sued the Department of Health and Human Services, arguing that Congress had not properly authorized these payments. A District Court judge agreed with the GOP in 2016, but allowed the payments to continue pending the outcome of an appeal filed by the Obama administration.

However, after Trump took office, the new administration has made it clear that it has no intention of continuing that appeal. So in Aug. 2017, the Court of Appeals for the D.C. Circuit allowed a coalition of states — including all of the states involved in the lawsuits being filed today — to intervene and effectively take the government’s place, defending the subsidies. That appeal has yet to be heard by the D.C. Circuit.

All of the lawsuits can be mooted by Congressional action. If, as many of the attorneys general have suggested, legislators can revise the law so that it explicitly includes these payments in appropriations then there would nothing for the President to halt, and nothing for the states to sue over.