New York, Minnesota sue HHS over $1 billion in lost funds

New York and Minnesota officials are suing the Trump administration for more than $1 billion in lost federal funding for health programs that cover low-income people.

The Basic Health Program,which was created by the Affordable Care Act, allows states to use federal dollars to set up health plans for people whose income is above the Medicaid threshold but below 200% of the poverty level. Legal immigrants are eligible for this program.

In New York people are spending as little as $20 per month in premiums under the program. That's much less than the average of $100 people pay for silver plans on the exchanges after subsidies.

So far, only Minnesota and New York have pursued the funding, which covered a total of about 800,000 people in both states.

HHS told state officials about the funding cut back in December. However the agency's email, dated Dec. 21, "failed to give a reasoned explanation" for the cut, which is a total of $1 billion for both states, according to the lawsuit filed Friday in U.S. District Court in New York.

"The abrupt decision to cut these vital funds is a cruel and reckless assault on New York's families and we will not allow it," New York State Attorney General Eric Schneiderman said in a statement.

This month, HHS also quietly withdrew a rule from review that outlined how the Basic Health Program would be funded next year. An HHS spokesman declined to comment on the decision to yank the rule or the pending lawsuit.

Experts caution that states have said BHP is too administratively complex. They also warn that moving thousands of enrollees out of a state exchange and into a BHP plan could make the marketplace less attractive to insurers and undermine the exchange's financing. Making the program less expensive for the state may involve cutting provider payments below exchange-plan rates, which is likely to anger providers.

Republicans in Congress say the Obama administration bypassed congressional authorization to fund the low-cost coverage program. Republican lawmakers argue that instead of seeking an appropriation, as required by the law, the administration redirected already appropriated taxpayer dollars to the BHP.