Trump administration officials announced late Thursday they will end reimbursements to insurers for lowering costs on individuals “immediately,” potentially destabilizing premiums on the exchange unless Congress reacts with legislation to continue the payments.
The reimbursements go to insurers for the “cost-sharing reductions” they provide certain participants in Obamacare silver plans, which help reduce expenses like copayments and lower deductibles. A legal review from the Trump administration’s Departments of Health and Human Services and Treasury, as well as the White House budget office, determined the reimbursements were illegal since they lacked an express appropriation from Congress. The Obama administration had been making them anyway, and the Trump administration had continued them until now.
“After a thorough legal review by HHS, Treasury, OMB, and an opinion from the Attorney General, we believe that the last administration overstepped the legal boundaries drawn by our Constitution,” write Eric Hargan, acting HHS secretary, and Seema Verma, Centers for Medicare & Medicaid Services administrator, in a statement. “Congress has not appropriated money for CSRs, and we will discontinue these payments immediately.”
Former House speaker John Boehner led a lawsuit against the Obama administration in 2014 on the same grounds. A U.S. district court judge agreed in 2016, but stayed the argument pending appeal before the U.S. Court of Appeals for the District of Columbia Circuit, giving lawmakers time to craft a solution of their own. The Trump administration hadn’t taken a side one way or the other, with former HHS secretary Tom Price observing on multiple occasions that he was a party in the House lawsuit after succeeding Sylvia Burwell at the department. Price was among the Republican House majority that initiated action against the Obama administration; taking over at HHS put him in the awkward position of being the defense in a suit he helped spark.
The cost-sharing reductions, which are legally required for individuals between 100 and 250 percent of the federal poverty level, came at an expense of about $7 billion to federal coffers in 2017. Without reimbursement from the government, those insurers could seek to raise premiums, potentially hiking the amount of premium tax credits paid to consumers. Nixing the payments also could drive some insurers from the exchange, given their legal freedom to do so state by state.
President Trump had threatened to end the reimbursements multiple times this year, and the uncertainty about his decision amid Congress’s efforts to repeal and replace the health care law spurred key Republican chairmen to announce support for funding them. “We should act within our constitutional authority now to temporarily and legally fund cost-sharing reduction payments as we move away from Obamacare and toward a patient-centered system that truly works for the American people,” said Ways & Means Chairman Kevin Brady during a hearing in June.
Sen. Lamar Alexander, who chairs the Health, Education, Labor, and Pensions Committee, echoed Brady’s remarks shortly after. “We have a collapsing individual market as a part of the Affordable Care Act, and as part of a transition from a collapsing market to a stable market in which Americans have more choices of insurance at a lower-cost, Republicans will need to temporarily support some things we would not normally support over the longer term—and I would hope Democrats would do that as well,” he said. Alexander held multiple hearings last month about stabilizing health insurance markets, after efforts to undo Obamacare fell short in the upper chamber. They had a bipartisan tone.
The D.C. appeals court granted 17 states plus the District the ability to be part of the House lawsuit in August. Now that the Trump administration has announced it is ending payments, the states can sue for their continuance, adding another wrinkle to the fight over the controversial subsidies.
