Capitol Alert

California sues Trump to preserve Obamacare discounts

California Attorney General Xavier Becerra, left, speaks during a hearing in July with Assembly member Kevin McCarty at the state Capitol.
California Attorney General Xavier Becerra, left, speaks during a hearing in July with Assembly member Kevin McCarty at the state Capitol.

California Attorney General Xavier Becerra on Friday filed a lawsuit against the Trump administration to block the president’s plan to end federal subsidies that are considered to be a critical component of Obamacare.

Becerra and attorneys general from 17 other states announced the lawsuit a day after the Trump administration declared that it would withhold cost-sharing subsidies that help low- and middle-income people pay for health care coverage under his predecessor’s signature law. Becerra called the order an attempt to “sabotage” Obamacare.

“Undermining the Affordable Care Act has been Donald Trump’s and many Republicans’ plans for a long time,” Becerra said. “It’s long past time that President Trump learned that he doesn’t get to just pick and choose which laws he’ll follow, and which bills he’ll pay.”

The head of the Covered California health exchange, Peter Lee, said Friday that Trump’s move could have “monumental” impact on premiums in the Golden State in 2019.

Becerra’s lawsuit in federal court argues that withholding cost-sharing subsidies violates a mandate in the law. The subsidies are intended to help lower consumer out-of-pocket health care costs, enabling more people to afford insurance.

The Trump administration contends the subsidies are illegal because Congress has not explicitly authorized them. Trump’s order followed several failed attempts by his administration and Republicans in Cognress to repeal Obama’s health law.

“The Democrats ObamaCare is imploding,” Trump wrote on Twitter Friday. “Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!”

He wrote “ObamaCare is a broken mess. Piece by piece we will now begin the process of giving America the great Health Care it deserves!”

His order weakens the health care law, critics say, because it may cause the costs of premiums to skyrocket and lead some insurers to drop out of markets in different states.

“Withholding these subsidies is a direct hit to many families who will see their health care costs rise,” said Connecticut Attorney General George Jepsen, who also said he planned to sue the Trump administration.

Trump’s order will not immediately affect Californians who bought health insurance through Covered California. Their plans are set for this year.

It also won’t affect the rates Californians will pay for insurance in 2018 because the state did not count on the Trump administration funding the subsidies when it developed rates for next year with the 11 health plans offered through Covered California. Covered California added a 12.4 percent surcharge to its silver tier plans to compensate for the projected loss in federal funding.

The state upped its marketing budget for Covered California to $111 million and extended its registration deadline to Jan. 31, aiming to give people more opportunities to sign up for insurance.

“We will be offering quality, affordable health insurance when open enrollment begins on Nov. 1,” Lee, Covered California’s executive director, said Friday.

Trump’s decision “will not affect any consumers’ benefits, what they receive in 2017, and again, in 2018, it won’t affect prices,” he said.

But Trump’s order will hurt insurers, Lee said. The 11 insurers in California will lose out on $188 million that they expected to receive over the next three months.

In 2019, he said, consumers might see a “monumental” increase in premiums because of the uncertainty Trump’s policies are creating for insurers.

“California is not insulated or immune from instability caused by national policies that have the effect of creating uncertainty,” Lee said.

Acting Health and Human Services Secretary Eric Hargan announced the plans to halt cost-sharing subsidies Thursday, saying “We will discontinue these payments immediately.”

The department also released a legal opinion explaining its reasoning. It said it would not defend the subsidies in court, contending the Obama administration misused its authority to fund the subsidies.

Gayle Batiste, president of a California union for registered nurses, called Trump’s decision “execution orders.”

“It is a cruel, callous, and calculated move to reverse the progress we’ve made under the ACA, harming millions of people who are counting on this care,” Batiste, president of Service Employees International Union Local 121.

In statements, California Democratic Sens. Dianne Feinstein and Kamala Harris blasted Trump for taking steps to unwind Obamacare, following several failed Republican attempts to repeal and replace the federal health care law.

“Make no mistake, without congressional action, President Trump’s decision to stop reimbursing insurance companies for the cost of reducing co-pays for low-income enrollees will break individual insurance markets across the country,” Feinstein said in a statement.