Obamacare subsidy fight shifts to California courtroom

Obamacare is back in court Monday.

Lawyers representing 18 states and the District of Columbia will ask a federal judge in California to block the Trump administration from terminating Obamacare’s cost-sharing subsidy funding aimed at helping lower income individuals afford health care costs.

Judge Vince Chhabria of the US District Court for the Northern District of California, who was appointed to the bench by President Barack Obama, could rule on the motion for a temporary restraining order as early as this week.

The Trump administration earlier this month announced it would immediately stop funding the cost-sharing subsidies that reimburse insurers for reducing the deductibles and co-pays of lower-income Obamacare enrollees. Although the government has been making the payments since January 2014 and nearly 6 million people receive the subsidies, Republican critics — including GOP lawmakers who challenged the payments in court — say that Congress never properly approved the money for those reimbursements.

If the government stops making the payments, insurance companies are likely to raise their premiums in the future, a move experts say could destabilize the entire law. More than 10 million Americans are enrolled in the Affordable Care Act, also known as Obamacare.

President Donald Trump has indicated several times that he hopes to spur congressional negotiations over the future of Obamacare.

“The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!” Trump tweeted earlier this month.

In court papers, the states, led by California Attorney General Xavier Becerra, argued that the payments are required and authorized by the Affordable Care Act. They said that the President’s decision was “arbitrary and capricious” in violation of the Administrative Procedures Act, a federal law that governs how agencies can establish regulations.

They also argued the administration’s decision violates the “Take Care” clause of the Constitution that mandates that the President faithfully execute the law.

“Since taking office, the Trump administration has engaged in a continued and sustained effort to ‘explode’ the ACA by making it more difficult and expensive for individuals to procure health insurance coverage through the Act’s health insurance Exchanges,” Becerra wrote.

“Interim relief will bring some modicum of stability and order to the situation and prevent irreparable harm to the plaintiff States and to the millions of Americans who have access to affordable health insurance because of the ACA,” he wrote.

Becerra said if the administration halts the payments, insurance companies would be “forced to raise premiums to cover the shortfall, and would strongly reconsider participating in the Exchanges in future years, making future years’ market viability uncertain at best.”

Many insurers have already raised their rates for 2018, anticipating Trump ending the subsidy payments.

Democrats in Congress, led by Minority leader Nancy Pelosi, filed a brief in support of the state’s position, emphasizing they were involved in the enactment of the Affordable Care Act and that Congress did provide the funding for the cost-sharing provisions.

Lawyers for the government maintain, however, that Congress never authorized the payments.

“The power of the purse is among the most essential powers of the Legislative Branch,” acting Assistant Attorney General Chad A. Readler argued in court papers. “No matter how compelling the rationale, neither the Executive nor the Judiciary has the authority to expend taxpayer dollars, including billions of dollars in annual cost-sharing reduction payments under the Affordable Care Act, if Congress has not appropriated those funds.”

Readler also emphasized that in 2016 a federal judge in the District of Columbia agreed that Congress never appropriated the payments in a suit brought by the GOP-led House of Representatives against the Obama administration.

That opinion was put on hold pending appeal, and after the change of administrations, the Trump Justice Department had been contemplating how it wanted to move forward. A status update is due in that case on October 30.

In court briefs, Readler suggested that the California case is simply an attempt by the states to find a more sympathetic judge. He recommended that Judge Chhabria refrain on ruling on the motion for a temporary injunction and instead transfer the case back to the District of Columbia, where the states are already parties to the lawsuit.

“Plaintiffs cannot simultaneously pursue identical claims in two courts,” he wrote.

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