By Ngoc Nguyen October
25, 2017
Update:
This story was originally published on Oct. 24, 2017. It was republished on
Oct. 25.
SAN
FRANCISCO — A federal judge Wednesday denied a petition to immediately
reinstate Affordable Care Act subsidies that President Donald Trump suspended
earlier this month.
The ruling
came in a lawsuit filed by 18
states and the District of Columbia, led by California Attorney General Xavier
Becerra. It sought an emergency restraining order compelling the Trump
administration to resume the Obamacare payments, which would have totaled $7
billion this year.
In
his ruling, U.S. District Judge Vince Chhabria wrote that “the emergency relief
sought by the states would be counterproductive.” He said the vast
majority of states have already prepared for the termination of the payments and
already “devised responses that give millions of lower-income people better
health coverage options than they would otherwise have had.”
Earlier
this month, the Trump administration ended the so-called cost-sharing
subsidies that compensate insurers for discounts given to low-income consumers
to help cover their out-of-pocket expenses under policies sold on the ACA
marketplaces. Officials argued that the subsidies are illegal because they have
not been approved by Congress.
These
subsidies are different from the tax credits many consumers get, depending on
their income, to pay Obamacare premiums.
Chhabria
said whether the funds were properly appropriated remains an open question as
the lawsuit continues. His decision dealt only with the restraining order.
Becerra
vowed to continue the legal battle to reinstate the payments.
“The
fight for affordable healthcare moves forward,” Becerra said in a statement.
“The actions by the Trump Administration undermine critical payments that keep
costs of healthcare affordable for working families. The judge made clear in
his ruling that the ACA is the law of the land. Without an emergency order
halting the Trump action, swift action in this litigation becomes even more
compelling.”
The
ruling was expected. Chhabria expressed skepticism Monday that Trump’s decision
to halt the subsidies would cause consumers immediate harm, as California and
many other states claimed in the suit.
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Since
assuming office in January, Trump has repeatedly threatened to stop the
cost-sharing subsidies. But he held off while Republicans in Congress were
working to replace the ACA.
Responding
to the uncertainty, a number of states have allowed insurers to raise their
premiums. California earlier this month ordered insurers to add a surcharge to some
policies next year, to offset the potential loss in federal funding and keep
the individual insurance market stable. The 12.4 percent surcharge was added to
silver plans only, the second-least-expensive tier.
“California
is doing a really good job in responding to the termination of [cost-sharing
reduction] payments in a way that is avoiding harm for people and actually
benefiting people,” said Judge Chhabria.
He
said that the vast majority of states have “seen the writing on the wall” and
chosen to respond by increasing premiums for silver plans. That, in turn, will
force the federal government to give higher tax credits to most consumers, so
they won’t feel any financial pinch.
Under
intense questioning by the judge, California Deputy Attorney General Gregory
Brown acknowledged that California has done a lot to mitigate the harm to
consumers. But he said the administration’s actions are destabilizing the
exchanges and the individual insurance market, and causing chaos for states and
consumers just eight days before enrollment begins Nov. 1.
Some
experts and states are concerned jumpy insurers will bolt from the market and
leave some regions with minimal or no choices for coverage. However, a
bipartisan bill in Congress would restore the cost-sharing subsidies and aims
to stabilize the insurance markets. But it’s not clear the bill will muster the
support it needs to pass both the Senate and House or whether Trump would sign
it.
In
California, 1.4 million people buy their own coverage through the state
marketplace, and 90 percent receive federal subsidies that reduce what they
pay.
During
the hearing, Chhabria read from a Covered California press
release that predicts how the changes will affect consumers in
2018. It notes that even though silver plan premiums will rise as a result of
the surcharge, the federal tax credits will also increase to cover the rise in
premiums. That would leave 4 out of 5 consumers with monthly premiums that stay
the same or decrease.
The
judge also said ruling in favor of the restraining order would mean insurance
companies could essentially “double collect” — benefiting from both the premium
increases from the surcharge on silver plans and the cost-sharing subsidies.
Brown
said a restraining order to resume the cost-sharing payments would bring back
the status quo. If insurance companies double collect, the state would
compensate by reducing rates down the line, he said.
“We’re
not looking to give insurance companies a windfall … but the stability is
important to insurance companies,” he said.
This
story was produced by Kaiser Health News, which publishes California Healthline, an editorially
independent service of the California Health Care Foundation.
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