Federal appeals court sides with insurers over ACA cost-sharing reduction payments

Gavel with scales of justice in background
A federal appeals court has weighed in on the ongoing battle over cost-sharing reduction payments. (William_Potter/iStock/Getty Images Plus)(William_Potter / iStock / Getty Images Plus)

A federal appeals court sided (PDF) with insurers in the ongoing fight over axed cost-sharing reduction payments, saying the Trump administration unlawfully halted the funds in 2017.

The ruling affirms a lower-court decision that CSR payments under the Affordable Care Act (ACA) represents "an unambiguous obligation on the government" to make the payments as outlined in the law.

The judges said that the Supreme Court's ruling in favor of health insurers over the ACA's risk corridor program also backs up this assertion.

"We see no sufficient basis for reaching a different conclusion," they wrote in the opinion.

RELATED: SCOTUS sides with insurers in battle over risk corridor payments

Both CSRs and the risk corridors were programs within the ACA that are designed to lure insurers into participating in the exchanges. CSR subsidies help low income Americans pay for coverage, while the risk corridors provide a boost to health plans that aren't performing strongly on the exchanges.

In a second, related ruling (PDF), the Court of Appeals for the Federal Circuit argues that health plans that raised premiums in 2018 to offset the loss of CSRs should not receive the entire amount in unpaid subsidies.

In response to the canceled CSRs, many insurers increased premiums on benchmark silver plans, thus increasing subsidies in tandem, in a practice referred to as "silver-loading."

The lower court ruled that plaintiffs Montana Health Co-Op and Sanford Health Plan are owed $1.2 million and $360,000, respectively, in CSR payments.