House, states, Trump administration reach settlement in ACA subsidies case

The Trump administration, the House of Representatives and the attorneys general from multiple states have reached a settlement in a federal court case concerning the legality of cost-sharing reduction payments.

The settlement has no immediate effect on what will happen to the CSR program, since President Donald Trump has already stopped reimbursing insurers for providing the subsidies to individual market customers. Yet it could have implications down the road.

The case that the parties have now settled dates back to 2014, when House Republicans sued the Obama administration, claiming that it unconstitutionally funded the CSR program without proper appropriation from Congress. Federal Judge Rosemary Collyer ruled in favor of the House, but the Obama administration appealed. That appeal was put on hold when Trump took office.

When Trump repeatedly threatened to stop funding the subsidies, a group of mostly blue states sought—and were granted—a motion to intervene in the case. And when the president made good on that threat, those states also filed a lawsuit in California seeking to compel the administration to make the CSR payments as the Affordable Care Act requires. However, their request for a temporary injunction was denied

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

Trump’s decision to stop CSR payments appears to be part of why the parties in the House v. Hargan case now want to settle.

"In light of changed circumstances, the House, the agencies and the states have determined to resolve the dispute that is pending before the U.S. Court of Appeals for the D.C. Circuit," their settlement agreement said.

The parties are also asking the court to dissolve Collyer’s ruling in favor of the House—which in theory could allow future administrations to resume funding the CSR program, according to a Health Affairs blog post by Washington and Lee University professor emeritus and ACA expert Timothy Jost, J.D.

It’s less clear, though, what the settlement will mean for any future separation-of-powers dispute over appropriations. In court documents, the parties agreed that Collyer’s ruling on that issue—which basically said the House had standing to sue the administration—“should not in any way control the resolution of the same or similar issues should they arise in other litigation between the House and the executive branch.”

While many insurers raised premiums for 2018 to account for the loss of CSR payments, some lawmakers have been trying to pass legislation that would appropriate short-term funding for the subsidies. It’s unclear, though, if those measures will ever pass.