California to Sue Trump Administration Over Health Insurance Subsidies

California Attorney General Xavier Becerra said Friday he will sue the Trump administration for halting billions of dollars in federal payments to health insurers that help low-income Americans afford health care under the Affordable Care Act.

The payments, known as cost-sharing subsidies, were created under the ACA to help insurers lower out-of-pocket costs for millions of Americans who buy health insurance through the exchange. While the payments go to the insurance companies, the consumers benefit because the savings are passed on to them in the form of lower deductibles, copays and prescription costs.

The White House on Thursday said it would immediately end the subsidies, with President Trump tweeting late Thursday night: “The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped.”

The subsidies have been the subject of an ongoing lawsuit originally lodged by House Republicans who sued the Obama administration in 2010, arguing the payments are illegal because Congress did not formally appropriate the funds. A federal judge agreed, and the Obama White House appealed the decision; the appeal was put on hold this year as Congress attempted to repeal and replace the ACA.

“Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare,” the White House said in a statement. “In light of this analysis, the government cannot lawfully make the cost-sharing reduction payments.”

In California, where 1.2 million residents buy insurance through the state exchange Covered California, about 700,000 people benefit from the cost-sharing subsidies. Nationally, the subsidies represent about $7 billion a year; of that, $750 million goes to California.

Becerra’s office is joined by the attorneys general of Kentucky, Massachusetts and Connecticut in the lawsuit. It will be filed in U.S. District Court for the Northern District of California. The suit will seek a ruling from a federal judge that the subsidies are lawful, and that ending them violates the law.

Trump’s decision to end the subsidies “is patently a decision that is reckless, it is sabotage, plain and simple,” Becerra said in a call with reporters Friday. “It’s past time President Trump learned he doesn’t get to pick and choose which laws he’ll follow and which bills he’ll pay.”

The lawsuit is the second one announced by the California Attorney General in a week, challenging Trump’s attempts to scale back provisions of the Affordable Care Act. Last week, Becerra’s office sued the Trump administration over its rollback of the ACA’s birth control mandate that allows more employers to opt out of the mandate by claiming religious or moral objections. Becerra said Friday it is unclear whether the two lawsuits will be consolidated.

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