19 states file lawsuit against Trump administration in defense of cost-sharing reduction payments

Gavel and flag in courtroom
Nineteen states are planning to fight the Trump administration's decision to end CSR payments. (Getty/AlexStar)

States are gearing up to fight the Trump administration's decision to end cost-sharing reduction (CSR) payments. Eric T. Schneiderman, the attorney general for New York, announced on Friday that he and the AGs of 18 other states will join a lawsuit against the action. 

The decision to cut off the CSR payments would destabilize the individual insurance markets, Schneiderman said. 

"President [Donald] Trump's move to cut these subsidies is a reckless assault on the healthcare of thousands of New Yorkers and millions of Americans," he said. "I will not allow President Trump to use New York families as pawns in a dangerous and partisan campaign to sabotage our healthcare system."

The lawsuit (PDF) was filed in California's northern district court and also includes the attorney generals for California, Connecticut, Delaware, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, North Carolina, New Mexico, Oregon, Pennsylvania, Vermont, Virginia, Rhode Island, Washington and the District of Columbia. 

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President Trump and the Department of Health and Human Services revealed plans last week to end the CSR payments, shortly after the president signed an executive order aimed at unwinding the Affordable Care Act. Continued funding for CSRs is one of the key solutions experts agree could help stabilize the law's individual insurance marketplaces, and the decision was slammed by both payer and provider groups

filing (PDF) in the ongoing legal battle over the payments confirms the administration's plans to end the payments immediately: The payment scheduled for Oct. 18 will be cancelled. 

RELATED: CBO says ending cost-sharing reduction payments will increase premiums, federal deficit 

Legal experts are doubtful that states will have a particularly strong case, but health insurance companies may have a better chance in court to fight for the CSR payments to continue, according to an article from Politico. 

Nicholas Bagley, a professor at the University of Michigan Law School, told the publication that it would be "a pretty extreme move" for courts to force the administration to continue making payments when both the executive branch and Congress believe they were not properly appropriated.  

But insurers would be more likely to find success in arguing that the federal government has reneged on a deal, he said. 

"I think insurers, if they sue over the cost-sharing payments, are going to win going home," Bagley said. "I've heard nobody even contest that."