Democratic state attorneys general can intervene in a court case over critical Obamacare payments that President Trump has threatened to cut off, a federal appeals court said Tuesday, finding the states demonstrated the risk of premium hikes and an uptick in the number of uninsured people seeking expensive care at state-funded hospitals.
More than a dozen AGs led by California Attorney General Xavier Becerra and New York Attorney General Eric Schneiderman asked to intervene in the lawsuit because Mr. Trump hasn’t said whether he will make the next set of payments for “cost-sharing reductions” that reimburse insurers who pick up low-income customers’ costs on Obamacare’s exchanges.
Without the payments, insurers say they will increase their premiums by an average of 20 percent next year, because they are required to pay those costs whether the government pays them whole or not.
“The States have shown a substantial risk that an injunction requiring termination of the payments at issue here … would lead directly and imminently to an increase in insurance prices, which in turn will increase the number of uninsured individuals for whom the States will have to provide health care,” a three-judge panel on the U.S. Court of Appeals for the District of Columbia Circuit wrote.
Mr. Trump is hoping to use the payments as leverage and force Democrats to the negotiating table on health care. He reissued his threat in the wake of the stunning collapse of Senate Republican efforts to prolong the debate over repealing the 2010 Affordable Care Act.
Democrats say those the cost-sharing payments must continue, even though Congress has never approved them. President Obama paid them anyway, and lost a court battle in which a judge side with House Republicans who said the payments were illegal.
Mr. Trump is letting the money flow for now but could end the payments by withdrawing an appeal of the district court’s decision, though analysts say Tuesday’s decision will make it harder for him to act unilaterally, since state attorneys general will have a seat at the litigating table.
Nicholas Bagley, a law professor at the University of Michigan who is closely tracking the issue, argued that Mr. Trump could still decide the payments are unlawful and cut them off, yet the court’s decision made it difficult for him to point fingers elsewhere.
“The administration could simply announce that, after a thorough review, the Justice Department has concluded that no appropriation exists to continue making the payments. Although there’s a regulation on the books requiring payments to be made, the absence of an appropriation would likely prevent the administration from following through,” Mr. Bagley wrote on his blog. “Politically, however, it’d be awfully convenient to blame the courts. The D.C. Circuit’s decision takes that approach off the table. If Trump wants to end the payments, it’ll be on his head.”
The court said its reasoning was based in part on the fact that the Justice Department hadn’t signaled whether it sided with the states’ position.
“The States have raised sufficient doubt concerning the adequacy of the Department’s representation of their interests,” the panel wrote. “Indeed, the Department nowhere argues in its intervention papers that it will adequately protect the States’ interests or even continue to prosecute the appeal.”
It also cited “accumulating public statements by high-level officials both about a potential change in position” in terms of the appeal.
On Twitter and in media interviews, Mr. Trump has threatened to use the cost-sharing situation to allow Obamacare to “implode.”
Congress could get settle the uncertainty by deciding to appropriate the payments, though that’s a tough sell among conservatives who don’t want to be seen as propping up Obamacare.
Senate Health Committee Chairman Lamar Alexander says Congress should authorize the funds, at least temporarily, as part of a near-term package this fall to prop up the ailing Obamacare markets, which suffer from dwindling choices and rising premiums.
For now, New York’s attorney general is hailing the ruling.
“This coalition of attorneys general stands ready to defend these vital subsidies and the quality, affordable health care they ensure for millions of families across the country,” Mr. Schneiderman said.