States seek to intervene in critical ACA subsidy case

Gavel and flag in courtroom
A group of attorneys general—led by California’s Xavier Becerra and New York’s Eric Schneiderman—are asking the U.S. Court of Appeals for the District of Columbia Circuit to let them intervene in a case that could have major implications for the Affordable Care Act marketplaces. (Getty/AlexStar)

Following months of uncertainty about future funding for a critical type of Affordable Care Act subsidy, states are taking matters into their own hands.

On Thursday, 16 attorneys general filed a motion to intervene in a federal court case that challenges the legality of cost-sharing reduction (CSR) payments, which health insurers receive from the government to subsidize ACA exchange enrollees’ out-of-pocket costs. The case, brought originally by House Republicans against the Obama administration, argues that Congress never appropriated funding for CSRs, so the payments are unconstitutional.  

A judge ruled in the plaintiffs’ favor last May, and the Obama administration subsequently appealed, but the case has been on hold since President Donald Trump was elected to allow his administration time to decide how to proceed. The next status report required of parties in the case is scheduled for Monday.

Both the Trump administration and Congress have been noncommittal about whether funding for the subsidies will continue after the case concludes, prompting health insurers and other industry trade groups to furiously lobby for a more definite answer. If CSR funding disappears, they say, premiums could spike in the individual market next year and more insurers could be compelled to exit.

Therefore, the group of attorneys general—led by California’s Xavier Becerra and New York’s Eric Schneiderman—are asking the U.S. Court of Appeals for the District of Columbia Circuit to let them intervene in the case. They want the court to temporarily lift the current order that holds the case in abeyance so that it can consider their motion.

As Trump himself has acknowledged, the suit against CSRs could “explode” the ACA marketplaces if it is successful, the state officials argue in their motion.

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“Until recently, states and their residents could rely on the executive branch to respond to this attack,” they write. “Now, events and statements, including from the president himself, have made clear that any such reliance is misplaced.”

Therefore, they are hoping to intervene in order to ensure an effective defense against the plaintiffs’ claims and “protect the interests of millions of state residents” who would be affected if CSR funding disappears.

Previously, the appeals court denied a motion to intervene filed by two consumers who argued that as recipients of CSRs, they could face “devastating consequences” depending on the outcome of the case.