Health & Medicine

California, 16 other states pledge to defend Obamacare subsidies if Trump drops out of lawsuit

Now that California, 16 other states and the District of Columbia have been given legal standing in a critical court appeal, California Attorney General Xavier Becerra said Wednesday they will fight to preserve the federal funds that underpin their Obamacare health exchanges if the Trump administration bows out of the lawsuit.

“My team is ready to defend these (federal) subsidies in court,” Becerra said. “We’re going to do everything we can to work with whoever is interested, whether it’s the Trump administration or Congress, to make sure that we continue to provide people with affordable health care. … We’re not going to go back to the days when health care was for the healthy or the wealthy.”

In this legal case, Republicans in the U.S. House of Representatives filed suit in 2014 against then-Secretary of Health and Human Services Sylvia Burwell, asserting that she had overstepped her authority by appropriating billions of dollars to cover discounts that insurers were mandated to give low-income consumers under the Patient Protection and Affordable Care Act, commonly called Obamacare.

While the Affordable Care Act promised reimbursement for the discounts, it provided no mechanism to pay the so-called cost-sharing reductions. Last year, U.S. District Judge Rosemary M. Collyer ruled that, while Congress clearly authorized the program, it had not appropriated funds and thus it was unconstitutional to pay the subsidies. However, she put her decision on hold, pending appeal to the U.S. Court of Appeals for the District of Columbia Circuit.

The dean of the UC Davis School of Law, Kevin R. Johnson, said the states could argue that since Congress mandated the cost-sharing program, that body should be compelled to provide the funding that states and insurers need to make it work.

Becerra, a Democrat who represented the 34th congressional district from 2013 to 2017, said the states would argue that Congress did contemplate the cost-sharing subsidies. “I say that, not only as someone who will argue that in court, I say that as a former member of Congress who helped draft the legislation,” Becerra said.

Becerra said he and other attorneys general filed a motion to join the appeal in May because they thought the president wasn’t going to protect health insurance marketplaces such as Covered California. Before and after the U.S. Senate failed to pass legislation to repeal the Affordable Care Act, Trump has tweeted that he and the Republican leadership should “let Obamacare implode” and then broker a deal.

“You could smell it. You could read it in tweets,” Becerra said. “When we intervened in May, we saw no one was really standing up for the millions of American families that rely upon the Affordable Care Act insurance plans to be able to send their kids to doctors and believe that they could afford to have their child in a hospital. The record is replete with evidence that the Trump administration is not willing to defend the Affordable Care Act.”

The appeals court ruled Tuesday that the states had standing in the lawsuit. Becerra said his office will work in concert with attorneys general in New York, Connecticut, Delaware, Hawaii, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, North Carolina, Pennsylvania, Vermont, Virginia, and Washington, and the District of Columbia. Ten of the states are led by Democratic governors and seven by Republicans.

Because of ongoing uncertainty about the availability of federal funds, Covered California announced Tuesday that it was planning to impose a surcharge on premiums for those consumers whose copayments and deductibles qualified for the insurer discounts.

While the action sounds ominous for the 650,000 silver-tier policy holders it affects, it is actually a bit of creative accounting that protects them from seeing sharp increases in payments and ensures financial stability for insurers. The health law imposes a cap on out-of-pocket costs for those consumers, whose incomes cannot exceed 250 percent of the federal poverty level. Under the Affordable Care Act, the federal government must pick up costs once consumer spending hits that out-of-pocket ceiling.

The insurers still discount copayments and deductibles on a sliding scale linked to income, and the premiums provide enough funding to cover those discounts on the front end rather than after care is provided.

Peter Lee, executive director of Covered California, has said California will move forward with the plan if an annual appropriation is not made for cost-sharing reductions. All rate changes are subject to state regulatory approval.

“We hope that we do not need to implement this work-around that would cause unnecessary confusion and ultimately cost the federal government more than it would to continue to make the payments directly,” Lee said.

Cathie Anderson: 916-321-1193, @CathieA_SacBee

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