Minnesota and New York are suing the Trump administration to halt an “abrupt and lawful cutoff” of more than $1 billion in cuts to basic health programs.
The federal lawsuit charges that the loss in federal funding jeopardizes programs that provide more than 800,000 low-income people with access to healthcare.
The lawsuit centers on reforms to basic health programs under Obamacare.
The law allows states to adopt a basic health program instead of offering Obamacare plans for certain low-income residents, the lawsuit said. The federal government gives states that participate in the basic health program federal funding and the states contract with private insurance plans to make affordable plans for low-income residents.
But the lawsuit charges that Trump’s Department of Health and Human Services withheld legally required funding to both states to operate the health programs.
“New York and Minnesota are the only states that operate [basic health programs], which collectively provide health insurance coverage to over 800,000 residents,” according to a press release from New York’s Attorney General’s office.
The lawsuit, filed in the U.S. District Court for the Southern District of New York, added that the states submitted alternative funding proposals to HHS that included rate hikes for Obamacare plans. However, it said HHS never considered the proposals.
The lawsuit said that amounts to more than $1 billion in lost funding per year.
HHS also cut off cost-sharing reduction payments to Obamacare insurers last October. The payments reimburse Obamacare insurers for lowering copays and deductibles for low-income Obamacare customers.
The initial announcement didn’t say anything about basic health programs. However, the two states heard from HHS several weeks later that they were likely to adopt a similar position for the programs.
HHS told the states it would stop paying the “CSR component” of the basic health program funding while continuing to pay premium tax credits.
In December, HHS told the states it wasn’t paying $266 million to New York and $32 million for Minnesota for their basic health programs because they were under the CSR component.
Trump’s decision to cut off CSRs has created its own slew of lawsuits as 18 states and the District of Columbia filed a lawsuit charging the payment termination was unlawful.
