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Federal Appeals Court Ruling Could Help Preserve Cost Sharing Subsidies

August 02, 2017

Yesterday, the U.S. Court of Appeals for the District of Columbia held that a coalition of 16 state attorneys general–including Pennsylvania Attorney General Josh Shapiro–may intervene in the House v. Price appeal relating to the future of cost-sharing subsidies. While the decision does not bar the Trump Administration from ending the cost-sharing reduction (CSR) payments, it does make it more difficult to cut off the payments.

In House v. Price, the Republican-led U.S. House filed an appeal arguing that the CSR payments to insurers are unconstitutional because Congress has not provided a specific appropriation for the payments. Last year, a federal district court ruled in the House’s favor, and the Obama Administration appealed the case to the D.C. Circuit Court.  Since the Trump Administration took office, it has threatened to drop the appeal, which would leave the lower court ruling in place. If the Trump Administration dropped the appeal, it would have no basis for paying the subsidies unless Congress acted to provide the money.

In a recent letter to the Centers for Medicare & Medicaid Services, Pennsylvania Insurance Commissioner Teresa Miller cautioned that, if federal cost-sharing subsidies were discontinued, Pennsylvania’s five individual market insurers could be forced to raise their 2018 policy year rates by an average of 20.3 percent.

During late May, the coalition of attorneys general in favor of the payments moved to intervene in House v. Price, claiming that they had an interest in the action and that the Trump Administration was not adequately defending their interests. In yesterday’s ruling, the three-judge panel of the appeals court agreed.

As a result of this ruling, if the Trump Administration stops making the CSR payments, the states have standing in House v. Price to argue that the payments must continue to be made. In addition, if the states ultimately convince the appellate court that the CSR funding has in fact been appropriated, the Administration would be required to pay it. 

Contact Laura Stevens Kent, vice president, federal legislative advocacy, or Jeff Bechtel, senior vice president, health economics and policy, for more information. 

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