Judge Refuses to Restore Trump Cuts in Obamacare Subsidies

A federal judge refused to order the Trump Administration to resume payment of Obamacare cost-sharing subsidies for the poor paid to insurers in a rejection of the emergency plea by California and 17 other states.

The Affordable Care Act, dubbed Obamacare, requires health insurance companies to subsidize the cost of co-payments and deductibles for lower-income people. The federal government is required to make advance payments to the companies to cover this subsidy, but it is unclear whether the ACA appropriated money for the payments, according to U.S. District Judge Vince Chhabria in San Francisco.

President Trump halted the payments and Democratic officials in the 18 states went to court seeking an emergency order to resume the subsidies.

Chhabria said, “If Congress doesn’t appropriate money for a program, the Constitution prohibits the executive branch from spending money on that program – even if Congress previously enacted a statute requiring the expenditure.”

The Obama Administration took the position that the ACA did appropriate money for the payments and drew funds to pay the subsidies. The Trump Administration has now concluded the act does not make the necessary appropriate.

The states argue Obama was right and seek to force resumption of the payments.

Chhabria noted that six years after its 2010 enactment the ACA is well on its way to achieving its goal of providing health coverage to millions of people who don’t get it through their jobs. Almost half of previously uninsured people in the U.S. now have coverage, including lower-income people who buy insurance from state exchanges with subsidies.

Following Trump’s election in November 2016, states began working with insurers to prepare for the likelihood that Trump would stop the subsidy payments. The problem was that even if the payments stopped, insurers were still required to provide cost-sharing reductions to lower-income people. To offset that cost increase, insurers would move to raise premiums for 2018 and if they could not offset costs they would withdraw from exchanges.

The states sued to force the Trump administration to resume payments and asked the court to issue an emergency injunction for force the resumption of subsidies while the case is pending. Chhabria refused.

The next hearing in the case is set for November 21.

California v. Trump, No. 17-cv-5895


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