Maine insurer sues Trump administration over end of CSR payments

lawsuit and book
In a new lawsuit, Maine Community Health Options accuses the government of violating its obligation to reimburse insurers for cost-sharing reduction subsidies. (Image: Getty/eccolo74)

In what appears to be the first such lawsuit of its kind, a nonprofit health insurer has sued the Trump administration for not making cost-sharing reduction payments to insurers.

In its complaint, Maine Community Health Options accuses the government of violating its obligation to reimburse insurers for the subsidies, which it said is required by both the Affordable Care Act and an “implied-in-fact” contract. The insurer is seeking damages in the form of $5.6 million in CSR payments that it estimates the government owes it for benefit year 2017.

CSRs—which help decrease out-of-pocket healthcare costs for low-income ACA exchange enrollees— have been at the center of a politically tinged legal battle since 2014. That’s when the Republican-controlled House sued the Obama administration on the grounds that funding for the subsidies was never appropriated by Congress.  

A federal judge sided with the House, but the payments continued while the Obama administration appealed—and when that appeals case was put on hold after President Donald Trump took office. His administration made the payments on a month-to-month basis until deciding to stop them in October.

Following that decision, the parties in the CSR case—then known as House v. Hargan—reached a settlement that effectively ended the legal dispute over whether the subsidies were unconstitutionally funded. While that outcome didn’t much affect insurers, which largely accounted for the end of CSRs in their 2018 rate filings, health plans remain unreimbursed for in the last three months of 2017.

And that is the crux of Maine Community Health Options’ complaint against the government. The insurer—one of the few remaining consumer operated and oriented plans—said it agreed to sell ACA exchange plans in 2017 “with the express understanding” that the government would make good on its obligation to reimburse it for CSRs.

“It was not until October 12, 2017—over a year after Health Options had committed itself irrevocably to the 2017 exchange—that the government first announced that it would not make CSR payments for the remainder of the 2017 benefit year,” the complaint noted.

The insurer also argued that “regardless of whether Congress appropriated sufficient funds to HHS to make the CSR payments, the government’s statutory obligation to make such payments, and plaintiff’s right to those payments, remain.”

This appears to be the first case brought by an insurer challenging the Trump administration’s actions on CSRs, health policy expert Katie Keith wrote in a Health Affairs Blog post. It is possible, though, that other insurers could follow Maine Community Health Options’ lead and file similar suits.