Democrats Are Launching A Legal Fight To Save Obamacare's Subsidy Payments

Attorneys general from 18 states and the District of Columbia filed a new lawsuit on Friday.

Democratic state attorneys general on Friday filed the first case challenging the Trump administration's decision to halt subsidy payments that help lower the cost of health insurance for low-income Americans who are covered under Obamacare.

A coalition of 19 attorneys general — representing 18 states and the District of Columbia — filed a lawsuit in the US District Court for the Northern District of California that accuses the Trump administration of violating the sections of the Affordable Care Act that require the subsidies, as well as other federal law.

"It’s well past time that President Trump learns that he doesn't just get to pick and choose which laws he’ll follow or which bills he’ll pay," California Attorney General Xavier Becerra said on a call with reporters. "Just because he’s in the White House doesn’t mean he can make those decisions.”

The White House announced on Thursday night that the federal government would stop making the payments, known as cost-sharing reductions, or CSRs, which help insurers cover the cost of providing less expensive health insurance plan options. The Justice Department said in court papers on Friday that the government would not make payments scheduled for Oct. 18.

The states and the District are asking the court for immediate action to force the administration to continue making the payments. They're claiming violations of the Administrative Procedure Act, arguing that the Affordable Care Act requires the payments and that the administration failed to articulate a clear reason for stopping them now.

The lawsuit also alleges that the Trump administration is "deliberately seeking to undermine, rather than faithfully execute" the Affordable Care Act, in violation of a section of the US Constitution that requires the president to "take Care that the Laws be faithfully executed."

"The Administration’s new refusal to make the required federal payments directly subverts the ACA, and will injure the Plaintiff States, their residents, and the entire healthcare system," the attorneys general wrote.

The lawsuit was filed by attorneys general from California, Connecticut, Delaware, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and the District of Columbia.

The Justice Department released a memo written by Attorney General Jeff Sessions laying out the legal rationale for stopping the payments. Sessions wrote that Affordable Care Act did not allow agencies to do what they had been doing for years, which is make payments from a separate, tax-related permanent appropriation. The subsidies could only be funded through a specific congressional appropriation, Sessions concluded, echoing legal arguments that House Republicans previously made in court against the subsidies.

Becerra told reporters that it is unclear what will happen to a pending challenge to the Obamacare subsidies filed by House Republicans. Becerra and other Democratic state attorneys general had intervened in that case, which is before the US Court of Appeals for the DC Circuit, to pick up the defense of the subsidies if the Trump administration decided to withdraw.

The Justice Department has yet to announce its plans for the DC Circuit case. A federal district judge last year ruled that the subsidy payments were unlawful, but put her ruling on hold pending the Obama administration's appeal.


Updated with information about the lawsuit filed by Democratic state attorneys general.