Source: National Association of Health Underwirters 

On Monday, House Republicans and the Trump Administration requested an additional three months to consider the House v. Price lawsuit challenging the ACA’s cost-sharing reduction (CSR) payments. This is the second 90-day extension sought by the Trump Administration, which remains divided over how to handle the payments that help offset out-of-pocket expenses for lower income households. Their request noted that they are continuing negotiations over how to resolve the case, including possible legislative action. The court filing this week postpones legal proceedings until August 20, after which the administration and House Republicans will report every 90 days whether to continue or further delay the case. During this time, the CSR payments are allowed to continue to flow to insurers.

The CSRs help offset out-of-pocket expenses for silver-tiered plans purchased through the marketplaces for households with incomes up to 250% of the federal poverty level. The subsidies are paid indirectly, as insurers reduce their costs for eligible consumers and in return receive monthly payments from the federal government to make up the difference, estimated at as much as $175 billion over 10 years. The CSR subsidies are separate from the ACA’s larger advanced premium tax credits.

The lawsuit was initiated by House Republicans in July 2014 when the chamber voted 225-201 to approve a resolution to sue the federal government for executive overreach in funding the CSR program without congressional appropriations. That lawsuit was formally filed in November 2014 and in May 2016 U.S. District Court Judge Rosemary M. Collyer ruled in favor of Congress that, while the program had been properly authorized by Congress, the Obama Administration’s actions to fund the program were unconstitutional because Congress had not appropriated funding. The Obama Administration appealed the ruling and the funds were allowed to continue to be paid while the appeals process continued. With the change of administrations, the lawsuit changed from House v. Burwell to become House v. Price, reflecting the new secretary of Health and Human Services, and therefore pitting congressional Republicans against the Trump Administration.

The Trump Administration can choose to drop its challenge to the ruling and/or no longer send payments to insurers, in which case insurers would still be required to provide the reduced cost owed to individuals. This has the potential to dramatically destabilize the marketplaces as it could result in many insurers opting to immediately withdraw from the marketplaces and leaving millions without coverage. Last year, insurers added language to their contracts permitting them to leave the market should the government funding cease and several insurers have already publically stated that they would immediately pull out of the marketplaces should this occur. The administration has made its May monthly payment to insurers to fund the program through June 21, although future payments remain in question as the administration has sent mixed messages on its plans for the program. An administration spokesperson said this week that they will not commit to any future payments as they evaluate their options with the program.

The Trump Administration has not indicated how, or whether, it plans to continue contesting the case. Reports indicate that President Trump favors dropping the lawsuit and allowing the subsidies to terminate, over the objections of his policy advisors. The president contends that the ACA marketplaces are bound to collapse regardless of his actions, but by allowing the subsidies to cease would force Democrats to the bargaining table over larger healthcare reform issues, as the public would blame Democrats for the failure of the subsidies. Congressional Democrats have routinely criticized this idea, arguing that the decision lies squarely with the president and choosing not to fund them would put healthcare at risk for millions of Americans. Senator Ron Wyden (D-OR) has been among the most vocal, equating the president’s demands to those of a hostage taker over other people’s healthcare.

Some congressional Republicans have said that they would support fully funding the CSR program through an appropriation should the administration drop its challenge or cease making payments. But it may be difficult to get enough support to pass legislation through Congress, even on a temporary basis as Republicans continue to work out their differences on the repeal and replace legislation. Many hard-line Republicans remain fully opposed to even temporarily propping up the program, after having blasted other ACA programs as insurer bailouts. And appropriating an estimated $7 billion annually for insurers would be a tough sell for many who oppose any ACA funding, much less funding that is going directly to insurers.

There are now effectively five possibilities for the program’s future:

  • The Trump Administration continues to seek and is granted a continuation of the case beyond August 20; in which case, the CSR payments are allowed to continue so long as the appeal process continues and the administration continues to send payments to insurers.
  • The Trump Administration resumes its appeal of the House v. Price lawsuit, arguing on behalf of the position that the CSR program is properly funded; in which case, the CSR payments are allowed to continue so long as the appeal process continues and the administration continues to send payments to insurers.
  • The Trump Administration resumes its appeal of the lawsuit but nevertheless decides to cease making payments to insurers.
  • The Trump Administration drops its appeal of the lawsuit, effectively taking the position of House Republicans that the CSR program was not properly funded; in which case, the ruling of Judge Collyer takes effect and all federal funding for the program must cease immediately.
  • Congress appropriates the estimated $7 billion annual funding for the program and this is signed into law by President Trump; in which case, the lawsuit becomes moot as funding for the program is congressionally authorized. The motion this week specifically mentioned that they may be pursuing this option.

NAHU is closely following this case and continues to advocate for market stability in the overall healthcare system. While the decision this week at least temporarily prevents any catastrophic damage to the individual health insurance market, we remain deeply concerned about the uncertainty that the administration’s actions are having on the stability of the marketplaces. We strongly advocate for a clear decision by the Trump Administration as insurers plan for the upcoming open enrollment period.