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GOP may use subsidy case to smother ACA exchange system

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Commenters are wondering whether President Donald Trump’s U.S. Department of Health and Human Services will now wake up a major lawsuit against the Affordable Care Act public exchange program.

The question is whether HHS will decide to keep the suit, U.S. House of Representatives v. Tom Price, in suspended animation, or let it move forward.

The House originally filed the suit in the district court for the District of Columbia, against Sylvia Burwell, former President Barack Obama’s HHS secretary, in 2014. House Republicans questioned whether Obama’s administration had a valid congressional appropriation to pay ACA cost-sharing reduction program subsidies.

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The cost-sharing reduction subsidy helps users of eligible exchange plans who have income under 250 percent of the federal poverty level pay the insurance plan deductibles, coinsurance amounts and co-payments. House Republicans acknowledged that the ACA gave HHS the authority to fund the ACA premium tax credit subsidy, but they said the ACA lacked any permanent funding source for the cost-sharing reduction subsidy program. The Obama administration argued that the ACA funding provision for the premium tax credit program also applied to the cost-sharing reduction subsidy program.

A district court judge sided with the House.

The Obama administration’s HHS appealed to the U.S. Court of Appeals for the District of Columbia in July. After Trump became president, the House and HHS agreed to freeze action on the case, to give Congress a chance to act.

In February, the House and HHS agreed to a court order that calls for the parties to give the court quarterly updates on the situation starting May 22.

Now that the effort to pass H.R. 1628, the American Health Care Act bill has stalled, “it is unclear whether the administration will… continue to delay the pending litigation,” the employee benefits arm of Wells Fargo says in a compliance alert sent to its group benefits clients.

CNBC, Forbes and the Wall Street Journal have also reported on the possibility that HHS could wake up House v. Price.

Up till now, Trump’s HHS has seemed to take the job of running the ACA exchange system seriously.

The Trump administration made a well-publicized move to pull some advertising that was supposed to go up at the end of the open enrollment period for 2017.

But the Trump administration’s Centers for Medicare & Medicaid Services, an arm of HHS, continued to report exchange enrollment results in the same format the Obama administration used. CMS is still offering regular support conference calls for the insurers and other entities that make the exchange system work.

The agency has also been trying to prepare for the possibility that the current ACA rules could stay in place, by proposing market stabilization regulations for 2018, including new enrollment rules.

Today, CMS emailed issuers a link to a 40-page slidedeck giving them advice about how to submit good cost-sharing reduction program reconciliation reports, or reports that help eliminate the gap between what CMS sent them while plan years were under way and what the issuers should have received.

 The AHCA bill itself would have killed the ACA cost-sharing reduction subsidy program, but included a $100 billion market stabilization fund. States could have used the grants to help commercial health insurance users pay their premiums or out-of-pocket expenses, according to the AHCA text.

Analysts at Milliman say cost-sharing reduction program payments alone accounted for $13.4 billion of the $206 billion in individual major medical revenue U.S. insurers collected from 2014 through 2016, or about 7 percent of revenue over that three-year period.

Issuers of individual coverage also received $70 billion in ACA premium tax credit subsidy money over that period, and about $16 billion in ACA reinsurance support, according to Milliman.


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