Legal, political and financial wrangling over healthcare reform and cost-sharing reductions coming to a head

gavel and books
The Trump administration must tell a federal appeals court today whether it will continue to defend the Affordable Care Act.

President Donald Trump may be abroad, but political and legal wrangling over the Affordable Care Act is coming to a head at home.

On Friday, Politico reported that Trump has told aides he wants to cut off ACA subsidy payments to health insurers who sell plans on the exchanges, a move that could put the health insurance exchanges into a tailspin.

“Trump has said that the bold move could force Congressional Democrats to the table to negotiate an Obamacare replacement,” according to the article.

UPDATE: Insurers get 90-day stay in House lawsuit over cost-sharing reduction payments

Previously, the administration said it would continue funding cost-sharing reduction (CSR) payments while a lawsuit surrounding them plays out. The case, brought originally by House Republicans against the Obama administration, argues that Congress never appropriated funding for CSRs, so the payments are unconstitutional. 

RELATED: States seek to intervene in critical ACA subsidy case

Today the issue played out in the courts. Under deadline, the Trump administration asked a federal appeals court for a 90-day stay on the proceedings.

In three months, the administration will again have to decide whether to defend the ACA or seek another 90-day delay. The feds could also hand the case off to state attorneys general.

The government pays CSRs to insurance companies so they can subsidize the out-of-pocket healthcare costs of low-income Affordable Care Act exchange customers. These subsidies—estimated at $7 billion this year—have been at the center of a lawsuit in which House Republicans claimed Congress never appropriated the money to fund them.

RELATED: Trump administration's statement on CSR funding not enough to reassure AHIP

On Friday, several organizations, including America’s Health Insurance Plans (AHIP), the Blue Cross Blue Shield Association and the American Hospital Association, wrote a letter (PDF) to Congressional leaders expressing “serious concerns about the continued uncertainty around funding for [CSR] payments,” adding there’s “clear evidence that this uncertainty is undermining the individual insurance market for 2018 and stands to negatively impact millions of people.”

Under ACA, insurers must keep paying even if federal funding stops. But it's more likely payers follow the lead of other companies that have already pulled out of the insurance markets. Insurers have the legal right to cancel policies immediately if the CSRs aren’t paid.

“Simply put, continued uncertainty, particularly the lack of clarity around CSR payments, has led several insurers to conclude that they cannot participate for 2018,” according to the letter. “Those who will participate are responding to the market uncertainty with premium requests that are as much as 60 percent higher than last year.”

RELATED: Trump administration starts to chip away at ACA regulations

Meanwhile, the Congressional Budget Office is due on Wednesday to release its score of financial and other impacts of the American Health Care Act—which, depending on the outcome, could force Congress to take another vote on the ACA replacement bill.

The CBO score on an earlier bill estimated 24 million Americans would lose their coverage if the AHCA is enacted into law.

RELATED: House GOP may have to vote again on healthcare bill

If the CSR payments are withheld, health insurers will not be the only ones to feel the pain, AHIP and the other organizations wrote in their letter. It will affect millions of American consumers, taxpayers and healthcare providers, they said.

  • Consumers who purchase their own insurance will have few, if any, coverage choices. As a result, millions of people will become uninsured, the letter states.
  • With more uninsured, providers will experience more uncompensated care, which will further strain their ability to meet the needs of their communities and will raise costs for everyone, including employers who sponsor group health plans for their employees.
  • Taxpayers will pay billions of extra dollars in costs due to higher premium subsidies—in fact, recent studies have found overall federal costs will be 23% higher.

“Plans need more certainty,” AHIP spokeswoman Kristine Grow told FierceHealthcare last month. “As plans make decisions for 2018, they do so with a view of wanting to serve consumers in the market for the full year. That's why it's so important to know what will happen with CSRs long term.”

Editor's note: This article was updated on Monday afternoon to indicate that the federal appeals court agreed to give the Trump administration a 90-day delay in the House v. Price lawsuit.