On October 20, 2017, the federal government filed a response to the states’ motion for a temporary restraining order and injunction in California v. Trump. The attorneys general of eighteen states and the District of Columbia sued the federal government on October 13 challenging as illegal President Trump’s decision to cease cost-sharing reduction (CSR) payments; these payments reimburse insurers for the reductions in out-of-pocket limits, deductibles, and other cost-sharing that the insurers are legally required to offer low-income enrollees in silver marketplace plans. On October 18, the states moved for a temporary restraining order and preliminary injunction to keep the payments flowing.
The Government’s Argument
The basic contention of the government’s brief is the argument that the House of Representatives made successfully to the federal district court in its lawsuit against the Obama administration—that the cost-sharing reduction requirements of the ACA are separate from its premium tax credit provisions and that, while the ACA appropriated funding for the premium tax credits through the tax refund provision of the Internal Revenue Code, Congress has never appropriated funding for the CSR payments. Since Congress has never appropriated funding for the CSR payments, the government cannot reimburse the insurers for reducing cost sharing, and the court cannot order it to do so. Until its recent change of position in the House litigation, the government argued that in fact the CSR funding had been appropriated.
The government further argues that the plaintiff states are not suffering the irreparable injury from the CSR funding cutoff that must be shown to gain an injunction; indeed, they have not been injured at all, and thus do not have standing to sue. The government argues that the states have not shown that any insurers have left the individual market because of the government’s decision. Any premium increases due to the funding cutoff will not happen until future years since rates are locked in for 2017. And in any event, increased premiums will be covered by increased tax credits. (This ignores the fact that many individual market enrollees do not receive tax credits and will have to bear the full cost of premium increases).
Any injury that may result is to insurers and to health plan enrollees, not to the states themselves, the government argues. Moreover, the statute nowhere requires the government to make CSR reimbursement payments monthly, so insurers had no right to count on receiving October payments in any event. When it allowed the states to intervene in the suit filed by the House, the Court of Appeals for the District of Columbia Circuit ruled that they in fact have injury sufficient to establish standing to challenge a decision that the CSRs should not be paid, but the government says in a footnote that it disagrees with this ruling.
Judge Chhabria’s Questions And The Government’s Answers
The brief specifically responds to a number of questions raised by the Judge Vince Chhabria, the presiding judge in the case, in an order of October 19, 2017. These questions were:
- If the administration plans to argue that the states cannot get emergency relief in this case because they are also parties by intervention on the appeal of the House of Representatives case in the Circuit Court for the District of Columbia, explain how they would get a request for emergency relief adjudicated promptly in that case.
- Given the fact that the ACA requires the government to reimburse insurers for cost sharing reductions, is there any reason to believe the insurers would not win if they sued in the Court of Claims? If so, how does that affect the merits or the balance of the harms in this case?
- Can the government provide a state-by-state breakdown of the states where insurers have raised their rates in anticipation of the government ceasing cost-sharing reduction payments? How do we know the increases are due to this rather than some other cause?
- How common is it for Congress to require (and not just authorize) expenditures by the executive branch without appropriating permanent or annual funding? Has there been litigation on this issue?
In response to the first question, the government argues that the case in the D.C. Circuit, in which the states have intervened as parties, involves the same facts and legal issues, and that the states should not be able to litigate the issue in two separate courts. The government does not explain, however, how the states could get an injunction in the D.C. Circuit, rather arguing that the question should be litigated in the D.C. district court that enjoined the payment of the CSR reimbursement in the first place (an order that is now stayed pending the D.C. Circuit appeal). The government acknowledges its position, however, that the D.C. courts have no jurisdiction over the case to begin with since the House of Representatives has no standing to sue to stop the CSR payments.
As to the second question, the government argues emphatically that insurers can recover any money they may be due—without conceding that the statute requires any payment at all—in the Court of Claims. The government cites the example of the numerous lawsuits that insurers have filed against the government in the Court of Claims when the government failed to pay them money owed them under the ACA’s risk corridor provisions. Some of those cases have been pending for over a year and a half, however, and are nowhere near final resolution.
In response to the third question, the government attaches an affidavit describing premium increases that insurers have made for 2018 to accommodate the nonpayment of the CSRs. Most states have allowed premium increases for 2018, which in turn have been permitted by CMS, but no further increases will be allowed at this time.
Responding to the last question, the government offers a list of program where federal laws have established a payment program funded through annual appropriations, the most prominent of which involves the Medicaid program. The government points to a handful of instances where such programs have not been funded, resulting in litigation. In its brief in the case brought by the House, the government argued that Congress passed a law in 1997 to end the creation of such “appropriated entitlements.”
Finally, the government asks that, if the court concludes an injunction is appropriate, it not apply nationwide and be stayed pending an appeal. The government notes that an injunction would require it to pay more than $600 million a month, and that an order for it to do so would not be appropriate until appellate review was concluded.
The government nowhere refers to or explains President Trump’s tweets as to his intentions in ending the CSR payments, cited throughout the states’ brief. The states will file their responsive brief on October 21.
Also on October 20, CMS posted at its REGTAP.info website a set of frequently asked questions describing the technical aspects of the CSR funding cutoff. CMS is not only ending future CSR payments, but also reconciliation proceedings for discrepancies in past CSR payments, unless plans have been overpaid.
CMS Letter Tells Iowa How Its 1332 Waiver Request Will Be Assessed
On October 19, 2017, the Centers for Medicare and Medicaid Services sent a letter to Iowa responding to its request for a 1332 state innovation waiver. In its request, Iowa asked the federal government to waive a number of provisions of the ACA to allow it to make its own premium credit eligibility decisions, with insurers directly enrolling Iowa residents in standard plans. It essentially asked the federal government to cover the full cost of its alternative program, as well as a reinsurance program.
CMS has not yet ruled on Iowa’s request. The October 19 letter informs Iowa as to how CMS will determine whether the state meets the section 1332 requirement that innovation waivers not increase the federal deficit, as well as section 1332’s formula for determining the amount of pass-through payments.
Iowa essentially stated that its proposal would increase enrollment in Iowa, and the federal government should pay what it would have paid in premium tax credits for all of the new enrollees. CMS has responded that CMS can only provide the amount of funding that would have been provided for premium tax credits in Iowa had it not implemented a waiver. Moreover, CMS will subtract from this amount the costs it will incur from the Iowa program and the money the federal government will lose because of lost exchange user fees and reduced individual and employer mandate penalties (employer mandate penalties would not be owed in Iowa because the penalty only applies to an employer if an employee collects premium tax credits through an exchange).
For Iowa’s request to be approved, it will need to make up the difference in the cost of its proposal and the amount the federal government can offer. This is very unlikely to happen.
from Health Affairs BlogHealth Affairs Blog http://ift.tt/2l3LRpr
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