If Trump cuts off the payments to insurers for the ACA's cost-sharing reductions, the next step is sure to be a lawsuit by Democratic attorneys general. They just won a critical legal victory that will give them a much bigger role in the ongoing legal battle over those payments — and if Trump carries out his threat to stop the CSR payments, they say they're ready to respond.
"If the Trump administration attempts to stop paying these subsidies, we will challenge them in court," New York Attorney General Eric Schneiderman said yesterday. Politico reports that the decision is taking a while, in part because White House lawyers are working through all of this.
If Trump cuts off the subsidies:
- Insurers would likely raise their premiums sharply and exit some markets altogether.
- The first step for Democratic AGs, legal experts said, would probably be to seek an injunction — a court order forcing the administration to keep making the subsidy payments while the issue works its way through the courts.
Schneiderman said he didn't know yet whether Democrats would file a new lawsuit or pursue their challenge through the case that's already pending. He and his fellow Democratic AGs won the right earlier this week to participate in that case, which has been on ice since the election.
Why it matters: The uncertainty surrounding the CSR payments is one of the most immediate threats to a stable insurance market. Cutting them off would be highly disruptive. Keeping them in limbo from month to month, as the Trump administration has been doing, is still reasonably disruptive. A reignited legal battle, in which Democrats now have a bigger role, is a sword of Damocles that could swing in almost any direction.
There's only one clean, easy solution here — and that's for Congress to explicitly fund these subsidies. Watch those bipartisan Senate talks this fall.