Eric Schneiderman for Attorney General

“Politico: Schneiderman Announces Lawsuit to Continue Obamacare Insurance Subsidies”

October 16, 2017

As published by Politico, on October 13, 2017.

Attorney General Eric Schneiderman announced Friday that he plans to file a lawsuit to block the Trump administration’s “breathtakingly reckless” attempt to halt crucial Obamacare insurance subsidies.

“His move is unacceptable. It is cruel and it is unlawful,” Schneiderman said during a press conference at his Manhattan office. “This is an effort to simply blow up the system.”

The lawsuit, to be filed in federal court in the Northern District of California, seeks to keep cost-sharing subsidy payments flowing, or risk a spike in insurance premiums and further instability going forward. Democratic attorneys general in California, Massachusetts and Kentucky will also be a part of the lawsuit, and other states may join as well.

“[Ending the subsidies] is patently a decision that is reckless,” California Attorney General Xavier Becerra said earlier Friday. “It is sabotage, plain and simple.”

Their argument is that cost-sharing reduction funding is codified in the Affordable Care Act alongside other subsidies to help people afford health insurance and therefore can’t be discontinued without amending the law.

“They’re making an argument that you have to have separate, specific language for this one particular set of credits,” Schneiderman said. “We say that’s not true and we feel very strongly that argument should prevail.”

The National Association of Insurance Commissioners, which represents state insurance regulators, estimated that stopping more than $1 billion in payments, which help some insurance consumers reduce their out-of-pocket payments, would cause a double-digit increase in premiums for 2018.

In August, Schneiderman, Becerra and more than a dozen other attorneys general were granted intervener status in a Washington, D.C.-based case brought by the House of Representatives challenging the legality of the cost-sharing subsidies. House Republicans allege the Obama administration funded the program without congressional appropriation; they won a lower court ruling, but it remains in the appeals process.

“We’re going to be fighting on every front,” he said.

President Donald Trump had threatened to cease paying the subsidies for months, calling them a “bailout” for the insurance industry. New York’s Department of Financial Services tacked on a roughly 0.6 percent increase to the approved 2018 individual market insurance rates to buffer against the increased costs that would result from ending CSRs. Other states like California have included much larger surcharges to account for their discontinuation, and structured them in a way to prevent passing the cost onto consumers.

Schneiderman said actions like that will prevent some pain for New Yorkers in the short term, but warned the long term implications would result in higher costs and number of uninsured individuals.

Schneiderman’s warnings have been echoed by numerous health care organizations in New York, as well as Gov. Andrew Cuomo, in opposing Trump’s decision.

“We will not stand silently by as the federal government tries to take away health care from New Yorkers,” Cuomo said in a statement. “As President Trump executes on his mission to strip health care protection from those who need it most, we stand ready to join states across the nation to sue the federal government. We will not go backwards.”

However, the loss of cost-sharing subsidies would almost immediately roil New York’s Essential Plan, which uses that funding to provide no- or low-cost health insurance to nearly 700,000 New Yorkers. Barring congressional or legal action restoring some or all of the subsidies, those people could be scrambling to find insurance next year.

“This latest action serves to undermine the effectiveness of that plan,” Laura Alfredo, deputy general council for the Greater New York Hospital Association, said at Schneiderman’s press conference. “It will result in about an $870 million hole in funding for the program, putting New York in basically an untenable position of having to find the funds to make up for it.”

A spokeswoman for the Department of Health said the department does not yet know what impact Trump’s decision will have on the Essential Plan.

U.S. Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) have been working behind the scenes on a possible bi-partisan deal to save the cost-sharing subsidies, as well as other smaller bore tweaks to the health care system. But Mick Mulvaney, the head of the Office of Management and Budget, said Friday that the president would oppose any attempt to do so unless it came with significant concessions.

“The president has said pretty clearly that he’s willing to talk to just about anybody about repealing and replacing [Obamacare],” Mulvaney said. “But if the straight-up question is: Is the president interested in continuing what he sees as corporate welfare and bailouts for the insurance companies? No.”