A nonprofit health insurance co-op in Maine is suing the Trump administration over the administration's halting of cost sharing reduction payments that the Obama administration had been making to insurers that provided Affordable Care Act plans.
Maine Community Health Options seeks $5.6 billion in CSR payments that it would have received in 2017 if the federal government hadn't announced that it was ending the program in October.
CSR payments were one of the two types of subsidies that the federal government used to lower the cost of ACA plans for low-income individuals. While the majority of ACA customers qualified for tax credits that helped them afford plans, a large percentage also qualified for further discounts on premiums, co-pays and deductibles that were funded by CSRs, which were paid directly to insurers by the Department of Health and Human Services.
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Congressional Republicans sued the Obama administration over the CSR program, arguing that the executive branch lacked the necessary Congressional authorization to make the payments.
While a federal judge ruled in favor of the GOP in 2016, the Obama administration kept making the payments while it appealed the ruling.
Upon taking office, President Trump repeatedly threatened to end the payments, but did not make good on that threat until October, after it became clear that Congressional Republicans wouldn't be able to pass a comprehensive Obamacare repeal bill.
Maine Community Health Options argues that by stopping the payments, the federal government was changing the rules in the middle of the game. The insurer's decision in 2016 to participate in the ACA marketplace throughout 2017 was based on the understanding that the feds would continue the subsidies, it says in its legal brief.
While no other insurer has yet sued over CSR payments, many others have sued over the more than $12 billion in risk corridor payments that the federal government has not provided to insurers that suffered losses in the first years of the ACA. The risk corridor program is essentially an insurance program for ACA health plans. Those that earned profits paid into the program and those that took losses received payments.
However, the risk corridor payments were dramatically pared back as a result of a provision snuck into a 2014 budget bill by Sen. Marco Rubio, R-Fla., which stated that the federal government could not pay out more to insurers that were losing money than it was receiving from profitable insurers. The insurers, two of which are presenting arguments to a three-judge panel on Wednesday, argue that that legislation amounted to reneging on a deal they made with the federal government.
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