Health Insurer Sues Trump Admin Over Slashed Subsidies For Low-Income Patients

[Gothmog]

The prior ruling rejecting the lawsuit by the State AGs is not the end of the issue on cost sharing reduction subsidies. The lack of an appropriation means that insurers have to sue the federal govt. directly for such subsidies and such judgments will be paid to the insurers. The first such lawsuit was filed http://talkingpointsmemo.com/dc/health-insurer-sues-trump-admin-over-slashed-subsidies-for-low-income-patients

In the wake of a surprisingly robust open enrollment period, the small health insurance co-op Maine Community Health Options (MCHO) became the first insurer in the country to sue the Trump administration over millions in subsidies that the federal government cut off in October.

The text of the Affordable Care Act, MCHO argued, guarantees the cost-sharing reduction (CSR) payments to insurance companies to compensate them for having to accept patients regardless of their health status. Following the Trump administration’s move to terminate the payments, insurers still have to provide the subsidies to low-income enrollees, but they no longer get reimbursed. A December report from Maine’s Bureau of Insurance says MCHO lost $1.9 million in October alone due to the loss of the CSRs, and the company’s lawsuit says it lost out on at least $5.6 million for the remainder of 2017.

The federal lawsuit, filed in late December in the U.S. Court of Federal Claims in Washington, D.C., is the first to hit the Trump administration on the CSR cuts since more than a dozen left-leaning states banded together in October to sue. (A California federal court declined their request to force the government to pay up, saying the states had not proven their residents would face “immediate harm.”)

[Gothmog]

1. Trumps plan to kill Obamacare isnt just recklessits illegal, and likely to fail in the courts.

Here is some more on why the lawsuit by insurers against the federal govt will succeed http://www.slate.com/articles/news_and_politics/jurisprudence/2017/10/trump_s_plan_to_kill_obamacare_is_likely_to_fail_in_the_courts.html

Second, insurers could sue the federal government to reimburse them for the cost-sharing reductions. Nicholas Bagley, a professor at the University of Michigan Law School, has explained how this would work, and why it would succeed. The federal government keeps a permanent appropriation called the Judgment Fund that pays court judgments when “payment is not otherwise provided for.” Insurers could sue in the Court of Federal Claims and would likely win given the ACA’s unequivocal command that these payments be made. As Bagley put it: “The question is thus not whether the government will pay, but when.”

There is already precedent for this type of litigation. The ACA includes a “risk corridor” program to encourage insurers to offer health plans on exchanges. This initiative directs HHS to collect money from health plans that exceed their financial targets and redistribute it to plans that lose money. But Congress failed to include an explicit appropriation for the program. Moreover, congressional Republicans kept attaching a rider to appropriations bills that prevented HHS from redistributing these funds. Eventually, insurers sued to get the money they were owed under federal law. The Court of Federal Claims has repeatedly found in their favor, ordering the government to pay out hundreds of millions of dollars to insurers. Trump’s retraction of cost-sharing subsidies will provoke similar suits and awards.

[Gothmog]

2. LEGAL LIMITS AND THE IMPLEMENTATION OF THE AFFORDABLE CARE ACT

Here is a good law review article on why these lawsuits will work https://poseidon01.ssrn.com/delivery.php?ID=442100001087089099004097095105097126033069042014023087069030083022114001096003124121107056043003059006011085125119000007077001098001090058041017071122098099081080008035052084074093118095013031115126095027121082090028091083116109118066101072072117104&EXT=pdf

Even without an appropriation, the ACA creates an entitlement to cost-sharing reductions.116 Health plans can vindicate that entitlement before the Court of Federal Claims.117 Payment would then come from the Judgment Fund—a permanently appropriated fund to pay court judgments where “payment is not otherwise provided for.”118

The question is thus not whether the government will pay, but when. Given that premium tax credits have been appropriated, it’s sensible to construe the ACA (if at all possible) to avoid the possibility that health plans might have to bring thousands of duplicative lawsuits to obtain similar subsidies that form part of the same program. That’s especially so given that in 1997, Congress enacted a statute to discourage the creation of entitlements that would have to be funded annually—so-called “backdoor spending.”119 If Congress meant to create a new entitlement without a permanent appropriation, the government is right that it probably would have spoken more clearly.120