Why Congress and the Trump Administration Should Appropriate Funding for the Cost-Sharing Subsidies

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    An end to payments for cost-sharing subsides would wreak havoc on the individual insurance markets
    The Trump administration and Congress should move quickly to appropriate funding for the cost-sharing subsidies

This week, the U.S. House of Representatives and the Trump administration asked the federal Court of Appeals for the District of Columbia Circuit to hold the appeal of House v. Price for another 90 days, until late August. House v. Price, formerly known as House v. Burwell, is a lawsuit brought by the U.S. House of Representatives against the Obama administration that claims that government payments to reimburse health insurers for reducing cost-sharing for low-income marketplace plan enrollees are illegal because funding for the reimbursements was never appropriated. The Affordable Care Act (ACA) requires health insurers to reduce cost-sharing for enrollees with incomes not exceeding 250 percent of the federal poverty level—or about $30,000 a year for an individual—who enroll in “silver” marketplace plans and directs the federal government to reimburse them for these reductions.

In spring 2016, the district court ruled for the House in this action and directed that further payments be stopped until Congress appropriates funding. The court stayed its order pending appeal, however, and the Obama administration appealed. The appeal has been on hold since the fall of 2016, initially at the request of the House, but more recently at the insistence of both the House and the Trump administration. In early March a court left the case on hold, with status reports due from the House and the Trump administration on May 22 and every 90 days thereafter.

The joint motion of the House and Trump administration offers little in the way of an explanation of the request. It merely says: “The parties continue to discuss measures that would obviate the need for judicial determination of this appeal, including potential legislative action.”

The “potential legislative action” would seem to refer to congressional efforts to repeal and replace—or at least amend—the ACA. But the American Health Care Act (AHCA), the House’s repeal-and-replace effort, retains the cost-sharing reductions (CSRs) through 2019 without including an explicit appropriation to fund them. The AHCA does not, therefore, address the problem.

An obvious legislative solution would be for Congress to appropriate the money for the CSR payments. The Obama administration, of course, contended that Congress had already done so—that the ACA’s permanent mandatory appropriation for premium tax credits also covered CSR payments. But if the Trump administration believes a further appropriation is necessary—which is certainly the position of the House—the parties should appropriate funding as soon as possible, lasting at least through 2019. The House has never objected institutionally to funding the CSRs, it has merely argued that they had not been funded.

The Trump administration may, on the other hand, be signaling to the court that it intends unilaterally to stop making the payments and dismiss the appeal, at which point the appeals court would remand to the district court to lift the stay and effectuate the injunction. This would wreak havoc on the individual insurance markets in many states. Insurers would, at a minimum, request dramatically increased premiums for 2018. Some insurers would almost certainly abandon the individual market, or at least the marketplaces, for 2018; indeed, some might leave the marketplaces for 2017, a step some could take if state regulators agree. There is, however, considerable evidence that most voters would hold the Trump administration responsible if insurance markets collapsed.

Moreover, the appeal is not just about the CSRs; it is also about the House’s ability to sue the president whenever it disagrees about an appropriation. No president should want such a precedent, which would threaten the prerogative of the executive branch to interpret and enforce the law. Attorneys general from 15 states and the District of Columbia have now sought to intervene in the House v. Price appeal, and, if they are allowed to do so would likely press the question of whether the House can sue the president. But it certainly seems odd for the protection of presidential prerogatives to depend on state attorneys general.

If the Trump administration decides to stop the CSR reimbursement payments, continued payments could likely not be compelled through the current appeal. The states—or insurers or marketplace enrollees—would probably have to bring a separate action in the district court to compel continued payment. At most, the appellate court could reverse the lower court order stopping the payments. Given the uncertainty created by the Trump administration, an action to compel continued payment should be considered.

The court will likely rule on the request for a continued hold very shortly. In the meantime, the Trump administration and Congress should move quickly to appropriate funding for the CSRs. It is the only responsible thing to do.

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Publication Details

Publication Date: May 26, 2017
Authors: Timothy S. Jost
Contact: Timothy S. Jost, Emeritus Professor, Washington and Lee University School of Law
Citation:
T. S. Jost, "Why Congress and the Trump Administration Should Appropriate Funding for the Cost-Sharing Subsidies," To the Point, The Commonwealth Fund, May 26, 2017.

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