The federal judge overseeing a lawsuit filed by more than a dozen states to stop President Trump’s plan to cut off billions of dollars in payments to health insurance providers has decided to not issue a preliminary injunction preventing the White House from halting the subsidies.
These monthly payments, created as part of the 2010 Affordable Care Act, are provided by the federal government to insurance providers who sell qualifying healthcare plans on the individual market (aka “Obamacare”). The subsidies are intended to help insurers keep out-of-pocket expenses — like co-pays and deductibles — low, particularly for Americans making between 100% and 250% of the federal poverty line.
Though it’s estimated that the annual spending on these subsidies is currently at around $7 billion, the exact amounts of the payments are not appropriated by Congress. Thus, President Trump has maintained that he has the authority to end them at any time. And on Oct. 12, the White House directed the agencies involved to halt the subsidy payments, which he has repeatedly characterized as “bailouts” to the insurance industry.
Without the subsidies, a number of insurers have indicated that they will either raise their premiums in 2018 or exit the individual market, causing the entire industry to become less stable and possibly leaving large swaths of Americans without any access to an individual plan.
The day after Trump’s announcement, California Attorney General Xavier Becerra led a coalition of 18 states in filing a federal lawsuit, accusing the President of violating the Administrative Procedures Act, which details how Executive branch agencies make and change rules, by making this policy change on a whim. The complaint also charges President Trump with failing to live up to the “Take Care” clause of the Constitution, which requires that the President faithfully execute the laws the land, not just the ones he likes.
The lawsuit sought an emergency injunction from the court, which held a hearing on the matter on Oct. 23.
Today, U.S. District Court Judge Vince Chhabria denied that request for a preliminary injunction [PDF], concluding that “the emergency relief sought by the states would be counterproductive.”
Chhabria points out that state insurance regulators, including California, “have been working for months to prepare for the termination of these payments,” and believes that “most state regulators have devised responses that give millions of lower-income people better health coverage options than they would otherwise have had.”
Any injunction issued by the court right now would have only lasted for a few months, but the affected insurance providers are already locked into their 2018 rates. What’s more, notes the court, these insurers are legally obliged to provide the cost-sharing measures to lower-income policyholders regardless of whether these subsidies continue.
“Therefore, allegations by the states about harms that loom further on the horizon – say, in 2019 or beyond – are not particularly relevant at the moment, because those harms can likely be addressed at the end of the case, if the states are indeed able to prevail on the merits,” notes Chhabria. “What matters for this motion is how people will be affected in 2017 and 2018 without a preliminary injunction.”
The states are also asking the court to declare that the cost-sharing subsidy payments are required by law, and that President Trump is therefore unable to simply turn them on and off at his discretion. Chhabria notes in his order that this is too complex an issue to have resolved after only a few days of consideration, but his initial read of the situation is that the Trump administration is on more solid legal ground.
We’ve reached out to Attorney General Becerra and New York Attorney General Eric Schneiderman for comment and will update if we receive a response.
After pulling the plug on these subsidies, the President, who has openly cheered for the Affordable Care Act to “explode,” called on Congress to address the payments through legislation.
Almost immediately, a bipartisan accord was reached that would have propped up the subsidies for another two years while making some tweaks to states’ ability to tinker with the requirements of the ACA. At first, the President seemed to grudgingly support the deal, but within hours was back to calling it a bailout and saying he would not support it.