A lawsuit filed by 18 states and the District of Columbia over the so-called cost-sharing reduction payments is working its way through the courts. | Joe Raedle/Getty Images Judge denies request to force Trump to pay Obamacare insurance subsidies Vince Chhabria failed to see the immediate threat to consumers that would require him to compel the federal government to make the payments.

A federal judge denied a request to immediately force the Trump administration to resume making the Obamacare insurance subsidy payments that it cut off earlier this month. The decision, made just a week before open enrollment begins, is a blow to plaintiffs.

U.S. District Court Judge Vince Chhabria ruled Wednesday against issuing an emergency order requiring the payments be restored while a lawsuit filed by 18 states and the District of Columbia over the the so-called cost-sharing reduction payments works its way through the courts.


Chhabria, an Obama appointee, failed to see the immediate threat to consumers that would require him to compel the federal government to make the payments, particularly because most states have implemented a work-around plan to mitigate financial harm to consumers.

In his 29-page ruling, Chhabria wrote that "because of the measures taken by the states in anticipation of a decision by the Administration to terminate CSR payments, the large majority of people who purchase insurance on exchanges throughout the country will either benefit or be unharmed. In particular, many lower-income people stand to benefit."

The ruling's language suggested the case may have been brought more for political reasons than legal merit. “With the important caveats that the Court has only been given a few days to study this complex matter and the states may not have fully developed all arguments, it initially appears the Administration has the stronger legal position,” Chhabria wrote.

While the court denied their emergency request, the state attorneys general said they will continue to press for a permanent resolution throughout the duration of their lawsuit.

POLITICO Pulse newsletter Get the latest on the health care fight, every weekday morning — in your inbox. Email Sign Up By signing up you agree to receive email newsletters or alerts from POLITICO. You can unsubscribe at any time. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

“The fight for affordable healthcare moves forward,” California Attorney General Xavier Becerra said in a statement. “The actions by the Trump Administration undermine critical payments that keep costs of healthcare affordable for working families. The judge made clear in his ruling that the ACA is the law of the land. Without an emergency order halting the Trump action, swift action in this litigation becomes even more compelling.”

The payments lower out-of-pocket costs for about 7 million Obamacare customers earning less than 250 percent of the federal poverty level, or about $30,000 for an individual and $61,500 for a family of four. About $6 billion of the $7 billion in payments due this year was made before President Donald Trump halted the money, according to insurance regulators.

Insurers are required to discount Obamacare customers' bills even without the federal payments. Health plans were expected to either stop selling coverage or raise rates by as much as an estimated 20 percent to account for the lost payments. In a bid to stabilize the individual insurance markets, at least a dozen Senate Republicans have signed onto bipartisan legislation that would extend the payments for two years.

Trump's decision to end the payments was eased by a long-running legal dispute over the subsidy program. House Republicans sued the Obama administration in 2014, arguing that the executive branch was funding the program illegally because Congress never appropriated the money. A federal judge in Washington, D.C., sided with the House last year, but the Obama administration appealed the decision.

Even had the judge ordered the payments to continue, the administration said it still has discretion about when to make the payments. Administration lawyers have noted that the law doesn’t require that the payments be made on any specific schedule, but simply that they be “periodic and timely.” The administration had been making the payments on a monthly basis before cutting them off.

The Trump administration didn't drop the appeal, which would have caused the payments to stop flowing, but instead sought delays from the court as the Obamacare repeal effort played out in Congress.

Justice Department lawyers had argued that Chhabria would be intruding on the D.C. court's turf by issuing an order requiring the administration to keep up the payments.

“As the only federal court to address this question found, the way that these Obamacare payments were made usurped Congress's spending power under the Constitution. The Department of Justice is pleased with the court’s decision today, and continues to defend the President's authority to return that power back to Congress,” said Lauren Ehrsam, spokeswoman for the DOJ.

During Monday's hearing in San Francisco, Chhabria expressed skepticism that an emergency order was needed because most states had anticipated the subsidies would be cut off and made alternate plans. Some states allowed insurers to make up for the lost funds by only increasing the cost of silver-tier plans sold on the ACA exchanges. That way, the premium tax credits will rise accordingly to cover the cost of higher premiums, shielding many consumers from the increase.

In an unusually strongly worded comment, the judge took California Deputy Attorney General Greg Brown to task for his response to questions about the potential of insurers benefiting from both the premium increases and restored cost-sharing subsidies, which was that the numbers would eventually reconcile. "This argument does not even merit a response," Chhabria wrote.

Ironically, the contingency plan most states put in place appears to have worked against the argument for an emergency order.

Chhabria said states should "stop yelling about higher premiums" and instead work on informing consumers.

"With open enrollment just days away, perhaps the states should focus instead on communicating the message that they have devised a response to the CSR payment termination that will prevent harm to the large majority of people while in fact allowing millions of lower-income people to get a better deal on health insurance in 2018," he wrote.

The director of California's exchange, Peter Lee, said not all states have adopted California's unique work-around plan, which protects people who earn too much to qualify for subsidies from facing higher premiums.

"Shame on the insurance commissioners that didn’t think ahead," Lee told POLITICO before the judge's ruling. "But in those states, it's a clear and present danger that they will have unnecessary rate increases that will leave many unsubsidized Americans without coverage."

The other states in the lawsuit are Connecticut, Delaware, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington.

Josh Gerstein contributed to this report.

