Minnesota, New York sue Trump administration over Basic Health Program funding cuts

justice scales and gavel
New York and Minnesota are asking a federal court to compel HHS to restore full funding to their Basic Health Programs. (Getty/BrianAJackson)

Though only two states opted to set up Basic Health Programs under the Affordable Care Act, it appears that those states are willing to fight to protect them.

New York and Minnesota are both suing the Trump administration for slashing federal funding for their respective programs, which offer a state-administered health insurance plans for qualifying low-income individuals.

“The Trump administration’s action jeopardizes quality care for hundreds of thousands of vulnerable New Yorkers and goes against everything we stand for in New York,” Gov. Andrew Cuomo said in a statement.

The move is tied to the Trump administration’s October decision to stop making cost-sharing reduction (CSR) payments. Following that decision, federal officials informed New York and Minnesota that they wouldn’t receive the “CSR component” of their funding allotment in their next quarterly payments, according to the states’ complaint (PDF).

While New York and Minnesota say they submitted proposals that outlined a path to restore that funding, the administration didn’t respond and instead moved forward with its plan to pay only a portion of the full federal funding owed.

That will mean New York will get about $1 billion less funding in 2018 to run its Essential Plan, and Minnesota will get about $130 million less to run MinnesotaCare, the two states estimate. New York’s program has about 700,000 enrollees and Minnesota’s has about 87,000.

“For each dollar Minnesota sends to Washington, D.C., we get just 53 cents back,” Minnesota Attorney General Lori Swanson said in a statement. “This lawsuit seeks to avoid Minnesota losing hundreds of millions of dollars of payments in the coming years.”

The suit argued that the Trump administration violated the Administrative Procedure Act in its decision to reduce funding for the two states’ Basic Health Programs. It asked the court to set aside the “unlawful” payment determinations and compel the Department of Health and Human Services to restore full funding to the states’ programs.

The Basic Health Program caters to individuals whose incomes are right above the income cutoff for Medicaid eligibility, and offers plans that are even more subsidized than those on the ACA marketplaces. But only New York and Minnesota took advantage of the option to set up a Basic Health Program, in part because the Obama administration didn’t issue guidance on them until 2015—after many had already made key decisions about setting up their exchanges. 

The program has also been in Republicans' crosshairs even before President Donald Trump took office. In mid-2016, Rep. Kevin Brady, R-Texas, and Energy and Rep. Fred Upton, R-Mich., subpoenaed HHS to get more information about funding for the Basic Health Program, which they argued was funded without congressional approval. 

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