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Trump Administration Punts Again on Obamacare Subsidy Lawsuit

The Trump administration declined to take a stand Monday on a lawsuit that affects the insurance rates of millions of Americans. Critics worry the delay will lead to more insurers leaving the individual markets.

Posted on May 22, 2017, at 12:30 p.m. ET

Atef Safadi / Reuters

The future remains uncertain for Obamacare markets after the Trump administration refused to make a decision Monday on whether to continue to fight for subsidies that bring down premium costs for millions of people.

The Trump administration is locked in a lawsuit — that originated during the Obama administration — with House Republicans who had sued because they argued the payments are illegal because Congress had not appropriated the funds. Trump still hasn’t said publicly whether he will fight to continue cost-sharing reduction payments, which provide insurers with billions of dollars to lower premiums for low and middle-income Americans, but has privately indicated that he wants the subsidies to end, according to Politico.

Monday had been a filing deadline for the Trump administration to either continue to defend the payments or concede to the House. Instead, the United States Court of Appeals for the District of Columbia granted a joint motion from the administration and House Republicans to delay the deadline for 90 days. This is the second time this year the administration has sought a three-month extension in the case.

The subsidies are projected to provide insurance companies 7 billion this year, which will in turn lower premiums for 7 million people.

In the meantime, Republicans say they will continue to let the payments flow rather than risk throwing the individual markets into turmoil. But uncertainty around the lawsuit appears to be a major factor for uneasy insurers who will need decide how they proceed.

The insurer deadline for 2018 rate filings is next month. That means insurance companies will have to set rates without any certainty that billions of dollars in subsidies will be there. They also can’t bank on whether the individual mandate to buy insurance will be enforced. Insurers have been calling on the administration to give them hard answers, and many are already fleeing Obamacare marketplaces.

Some Obamacare proponents are accusing the Trump administration of trying to quietly dismantle the Obamacare markets while denying the responsibility that would come from shutting down the subsidies outright.

“At a critical period when insurers are deciding premiums for next year, Republicans are pouring uncertainty into the health insurance marketplaces,” said House minority leader Nancy Pelosi in a statement.

The subsidies are designed to make insurance premiums more affordable for people with income between 100% and 250% of the poverty level. For an individual, that works out to an income up to $30,000. For a family of four it works out to an income of about $62,000.

The Kaiser Family Foundation projects that premiums in Obamacare marketplaces would jump 19% if the subsidies are cut off. Kaiser projects the hardest hit state would be Mississippi, with a premium hike of 27%.

The lawsuit, now named House v. Price after Trump’s Health and Human Services Secretary Tom Price, could be kept alive even if the administration drops it. Earlier this month 15 states and the District of Columbia filed a motion to intervene, arguing that they are entitled to defend the continued implementation of Obama’s Affordable Care Act. The Trump administration and House Republicans have said they will respond separately to the states’ motion.

House Republicans sued over the payments in November, 2014. In May of 2016 the federal district court for the District of Columbia ruled in the House’s favor. The Obama administration appealed the decision to the District of Columbia Circuit Court of Appeals.

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