White House, Democrat AGs settle cost-sharing payment lawsuit

(Updated at 8:15 p.m. ET)

The Trump administration, House GOP lawmakers and 19 Democratic state attorneys general have settled a long-running lawsuit over the fate of cost-sharing subsidies for insurers, according to court documents.

The White House and U.S. House of Representatives lawyers told a federal appeals court on Friday that they have reached a "conditional settlement agreement" with approval from the state attorneys general. The agreement must be approved by the U.S. Court of Appeals for the District of Columbia Circuit, but it would allow the state attorneys general to continue a separate lawsuit against the Trump administration in California federal court over the subsidies without House Republicans' involvement.

The settlement also proposes to eliminate an earlier court order that prevented the White House from paying the cost-sharing subsidies even if Congress had not appropriated the funds, according to spokesperson from California's Department of Justice.

This year, cost-sharing subsidies have amounted to $7 billion.

Sen. Susan Collins (R-Maine) has said she would not vote for the Republicans' tax plan unless lawmakers also voted on a separate bill to fund the cost-sharing subsidies. GOP leadership unveiled their final tax bill just an hour before the lawsuit settlement was filed.

House Republicans initially sued the Obama administration, accusing it of illegally making the payments after Congress failed to appropriate the funds. A U.S. District Court judge ruled in favor of House Republicans in May 2016, and the case has been on hold at the U.S. Court of Appeals for the D.C. Circuit ever since.

In October, President Donald Trump stopped paying the cost-sharing subsidies just two weeks before Affordable Care Act enrollment started. He had repeatedly threatened to end the payments, calling them insurer "bailouts."

Soon after, 19 state attorneys general sued the Trump administration to prevent him from ending the subsidies, but a federal judge in California denied their request. That case will now be the vessel for the cost-sharing subsidy dispute.