Trump Administration Doesn’t Have to Make Cost Sharing Payments

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The Trump administration won a federal court case on Wednesday, October 25, 2017, which means that it will not have to go back to paying for the Affordable Care Act’s cost sharing payments.

According to the 2010 ACA (more commonly known as “Obamacare”), insurance companies are required to give discounts to low income customers whose health plans come from an ACA marketplace. These payments from the federal government were intended to reimburse the companies for these benefits.

President Trump decided to stop making these payments earlier this month. The lawsuit attempting to make the administration pay came from 19 state attorneys general. It does not seek a permanent continuance of the payments, an issue which will be decided later, but merely that the federal government keeps making the payments until that point in time.

The decision by Judge Vince Chhabria of the U.S. District Court for the Northern District of California ruled in the president’s favor, as the judge believes that the payments would be counterproductive. He also noted that the insurance regulators of most states have already devised strategies for this situation, by allowing the insurance companies to charge higher rates in the next year.

“Both sides have reasonable arguments,” the judge said, but he added that “it initially appears that the Administration has the stronger legal position.” As he noted, the ACA does not require that the payments to insurance companies be permanent, though it does require a separate subsidy to help people with health plans with the program to afford their monthly premiums.

Meanwhile, the Congressional Budget Office was at work assessing a bipartisan Senate plan to try and stabilize the ACA marketplaces. Their results, which had assumed that the cost sharing payments would continue, did not seem to indicate much effect on the national budget from them being cancelled one way or another, though some still argue that this will ultimately save the government money.

Also on Wednesday, an inquiry by the Health and Human Services Department’s internal watchdog came out assessing the administration’s decision to cancel certain outreach programs back in January. The results say that the federal government lost $1.1 million as a result. They say that they cannot tell what effect this may have had on enrollment.

President Trump and the Republican Congress tried to have the ACA repealed in favor of a new law recently, but the bill did not pass.

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