On October 12, 2017, the White House press office announced that the Trump Administration would no longer make cost-sharing reduction (CSR) payments to insurers, which it referred to as a “bailout of insurance companies through these unlawful payments.” In a filing on October 13, the Trump Administration informed the D.C. Circuit Court that these payments did not constitute proper appropriations and would be stopped. Although the Affordable Care Act (ACA) has a statutory requirement that the federal government reimburse insurers through CSR payments, they have been the subject of litigation over whether this reimbursement to insurers was an appropriation. The House of Representatives sued the Obama Administration in 2014, arguing that CSR payments were illegal, as Congress had not appropriated funding. The House did not drop the case after President Trump assumed office but has asked for a series of delays while it negotiated with the new Administration to repeal and replace the Affordable Care Act. Office of Management and Budget Director Mick Mulvaney also noted that President Trump will reject any attempts by Congress to reinstate subsidy payments unless Congress passes ACA repeal or funds a border wall.
On August 1, the D.C. Circuit ruled that 17 states and the District of Columbia can intervene in this lawsuit. The Court agreed with the states that “accumulating public statements by high-level officials” raised concerns that the Trump Administration would continue defending the states’ interests. After the announcement last week, 19 Democratic Attorneys General filed suit in the U.S. District Court for the Northern District of California, challenging the Administration’s decision to halt CSR payments.
CSR payments are estimated to total $7 billion this year and cover 6 million individuals. In mid-August, the Congressional Budget Office (CBO) released an analysis of the impact of ending CSR payments, effective January 1, 2018. The CBO found that insurance premiums for Affordable Care Act (ACA) “silver” plans would increase 20 percent in 2018, and the deficit would increase by $194 billion over 10 years.
