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May 22, 2017

House, DOJ seek additional delay in lawsuit challenging ACA cost-sharing payments

Daily Briefing

The House and the Department of Justice (DOJ) on Monday filed a joint motion requesting another 90-day delay in a lawsuit challenging the executive branch's power to reimburse insurers for the Affordable Care Act's (ACA) cost-sharing subsidies.

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Case details

The Department of Treasury has been reimbursing insurers for the ACA's cost-sharing reductions (CSRs), which help low-income consumers pay for out-of-pocket costs such as coinsurance, copayments, and deductibles.

The lawsuit, which House Republicans authorized in July 2014, contends that those payment are illegal, since Congress hasn't explicitly appropriated any funds for the CSRs.

U.S. District Judge Rosemary Collyer in May 2016 ruled that former President Barack Obama's administration did not have the authority to make the payments without Congress first appropriating funding.

The Obama administration last year appealed the ruling to the District of Columbia U.S. Circuit Court of Appeals, where it is currently on hold as House Republicans and DOJ determine how they plan to proceed with the case under the Trump administration. DOJ had until Monday to state whether it will defend the cost-sharing subsidies, drop the federal government's appeal of the suit, or seek an additional delay.

Parties seek additional delay

According to CNBC, people familiar with the matter say the House and DOJ filed a motion to delay the lawsuit for an additional 90 days, which would extend the lawsuit through late August.

During that time, President Trump could unilaterally decide whether or not to make the payments, CNBC reports. White House officials previously had said the Trump administration would make the monthly payments for May, which were due on May 19, but future payments were uncertain. According to CNBC, the next payment is due June 20.

However, a senior administration official said the Trump administration is expected to continue to make the cost-sharing payments to insurers until the suit is settled.

A GOP source said, "We feel payments should continue while we figure out a solution," adding that DOJ "is working with House Republicans in good faith to achieve this."

If the administration drops the lawsuit or stops making the payments, insurers would still be required to give the out-of-pocket cost discounts under the ACA, but the federal government wouldn't be able to compensate insurers without an explicit appropriation from Congress.

Some experts say that insurers likely wouldn't issue the discounts without the prospect of reimbursement; rather, they'd likely bolt the ACA's exchanges altogether, and those that remained would likely increase premiums. In such a scenario, the Urban Institute estimates that premiums for silver-level plans would increase by an average of $1,040 per person.


Some industry experts say the Trump administration's decision to delay the suit does little to allay insurers concerns over the payments, which they say are essential to stabilizing the ACA's exchange markets.

Nicholas Bagley, a law professor at the University of Michigan, in a tweet explained that "Congress can still appropriate" money to fund the cost-sharing payments and the Trump administration "can still drop the appeal."

Further, Larry Levitt, a senior vice president at Kaiser Family Foundation, in a tweet said, "A delay in the court case over ACA cost-sharing payments avoids an immediate crisis, but continues uncertainty for insurers."

According to CNBC, the civil division of DOJ and the House's general counsel's office declined to comment on the request to further delay the suit. HHS did not respond to requests for comment on the request, and the White House Press Office did not respond to a request for comment within CNBC's deadline (Owens, Axios, 5/22; Tausche, CNBC, 5/22; Demko/Dawsey, Politico, 5/22; Drucker, Washington Examiner, 5/22; Bagley tweet, 5/22; Levitt tweet, 5/22).

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