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April 11, 2017

Trump administration says it will continue to make ACA cost-sharing subsidy payments

Daily Briefing

The Trump administration in a written statement on Monday said it will continue to fund the Affordable Care Act's (ACA) cost-sharing subsidies while a lawsuit challenging the payments continues, but the White House has not clearly stated its stance on the suit itself.

Fate of cost-sharing subsidies uncertain amid House GOP lawsuit

House Republicans in July 2014 authorized a lawsuit, which lawmakers originally filed against former President Barack Obama's administration that contends Congress never approved the Department of the Treasury's payments to insurers for cost-sharing reductions to help low-income consumers pay for out-of-pocket costs such as coinsurance, copayments, and deductibles.

The lawsuit that could sink the ACA, explained

The Obama administration in May 2016 appealed a ruling in House Republicans' favor to the District of Columbia U.S. Circuit Court of Appeals. However, after the presidential election, House Republicans and DOJ twice filed a motion to delay the suit until May to allow the parties more time to work toward a resolution, which the appeals court granted.

The uncertainty surrounding the lawsuit has been a cause of concern among insurers and state regulators. Several insurers, facing steep losses on exchange plans, have decided to reduce their exchange offerings or have withdrawn completely from the exchanges, creating concern that people in some counties might not have health plan options next year.

HHS says subsidies will continue to be funded

HHS in a statement to the Times wrote, "The precedent is that while the lawsuit is being litigated, the cost-sharing subsidies will be funded," adding, "It would be fair for you to report that there has been no policy change in the current administration."

According to the Times, the statement could encourage insurers, which have said the subsidies are essential to stabilizing the ACA's exchange markets, to continue selling exchange plans. But, the Times reports, "the lawsuit still hovers like a menacing cloud over the insurance [exchanges]."

Many insurers still could increase premiums for the 2018 coverage year to mitigate any potential financial risks, the Times reports. The Trump administration in February proposed extending the deadline for premium rate filings among insurers seeking to sell 2018 plans in states that rely on the federal exchange for enrollment from May 3 to June 21.

Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation, in a tweet on Tuesday criticized HHS' statement, saying it offers insurers "no clarity" about whether there will be funding for the cost-sharing reductions in 2018.  

Candy Gallagher, senior vice president of state policy at America's Health Insurance Plans, in a recent presentation told regulators, "The uncertainty that has been fostered with the concerns about ... the continued and uninterrupted payment of cost-sharing reductions could do grievous harm to the individual market" (Pear, New York Times, 4/10; Hansard, Bloomberg BNA, 4/4; Kliff, Vox, 4/10; Levitt tweet, 4/11).

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