Court Stays Cost-Sharing Reduction Payment Case, Giving Control To New Administration And Congress

On December 5, 2016, the Circuit Court of Appeals for the District of Columbia acceded to the request of the House of Representatives and stayed further proceedings in House v. Burwell pending further motions by the parties, due by February 21, 2017. In this case, the House of Representatives claims that government payments to insurers to reimburse them for reducing cost sharing for silver plan marketplace enrollees with incomes not exceeding 250 percent of the poverty level are illegal because Congress has not appropriated the funds for those payments.

The ACA requires insurers to reduce cost-sharing for these enrollees and the government to reimburse them. However, the House and the Obama administration have taken different positions as to whether money has in fact been appropriated for the reimbursement payments. The lower court sided with the House.

This appellate court's order means that this lawsuit and its consequences are effectively no longer in the hands of the Obama administration and are now the full responsibility of the Trump administration and of Congress. Over six million marketplace enrollees receive assistance through the cost sharing reductions. The cost-sharing reductions dramatically reduce the cost of health care services and many marketplace enrollees would be unable to afford coverage without them. Were the cost-sharing reduction reimbursement payments to insurers to terminate precipitously, the financial consequences for insurers would be disastrous. Insurers would likely seek to terminate marketplace participation, raise their premiums, or cease reducing cost sharing, although some or all of these options may not be available legally.

The Trump administration may be reluctant to simply dismiss the appeal, as it would leave in place a strong legal precedent that a single house of congress can sue an administration any time it disagrees with the president on the interpretation of an appropriations measure. The district court decision likely would have been reversed on this point, and that would have caused the appeals court to dismiss the lawsuit for lack of jurisdiction. The administration cannot assume that both houses of Congress will always be controlled by a friendly party and no president should want to be vulnerable to congressional lawsuits challenging its interpretation of appropriations.

Both the Trump administration and Congress, moreover, should worry about the consequences of the lower court's order enjoining further payments of premium tax credits in the absence of new appropriation becoming effective immediately. The effect could be to launch the marketplaces into chaos before Congress has even had time to consider an orderly repeal and replace process, much less actually propose a replacement plan.

The reasonable course for Congress at this time is to appropriate funds to cover the cost-sharing reduction payments for 2017 (and 2018 to avoid a collapse of the marketplaces at the end of 2017), and then to negotiate with the Trump administration the withdrawal of the appeal and the vacating of the district court's order with the administration. This alternative will undoubtedly be difficult for some Republicans to accept, but the alternative should be far more distasteful.

from Health Affairs BlogHealth Affairs Blog http://ift.tt/2h7MgQL