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 U.S. Court of Appeals for the District of Columbia Circuit to hold the case in abeyance for another 90 days, as "the parties continue to discuss measures that would obviate the need for judicial determination of this appeal, including potential legislative action," the request said.
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, in bold type.
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.
Trump has said he could cut off the payments to force Democrats to the table.
But Democratic leaders this weekend questioned the tactic of playing politics with CSR funding. The ranking members of the House and Senate committees that oversee HHS asked CMS Administrator Seema Verma to confirm or deny a report that she told insurance executives that the administration would continue to cover cost-sharing reduction payments if those executives publicly supported the House replacement bill for Obamacare.
The report, published last week, triggered "serious concerns" for Sen. Patty Murray (D-Wash.), Rep. Richard Neal (D-Mass.), Rep. Frank Pallone (D-N.J.), and Sen. Ron Wyden (D-Ore.), who said that using CSR funding "as a tool to gain leverage in political negotiations" is wholly inappropriate.
Republicans in Washington may not be the only ones who can resolve the ambiguity around who is authorized to fund the CSRs. If states were allowed to intervene in the lawsuit—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 U.S. Justice Department, 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."
The document filed Monday in the appellate court noted that the states had asked to intervene, and said HHS Secretary Tom Price and Treasury Secretary Steven Mnuchin would respond to that intervention request later.
