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Judge Seems Likely to Turn Back States’ ACA Subsidy Injunction Bid

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A federal judge in San Francisco appears to be set to turn back a request from a group of Democratic states attorneys general looking to force the Trump administration to make hundreds of millions of dollars in Affordable Care Act cost-sharing reduction subsidy payments that insurers were expecting to get from now until the end of the year.

President Donald Trump announced on Oct. 11 that he would end federal payments for the subsidy program, pays insurers to cover out-of-pocket expenses and co-payments for about 7 million low-income people who use ACA public exchange plans.

(Related: Attorneys General Seek Emergency Order to Protect ACA Subsidy)

California, New York, Connecticut, Pennsylvania, 14 other states and the District of Columbia earlier this month sued the administration, claiming the decision could cut off billions of dollars in subsidies and create chaos in ACA exchanges in the run-up to open enrollment, which is set to begin on Nov. 1.

But, at a court hearing Monday, U.S. District Judge Vince Chhabria of the Northern District of California, who is overseeing the case, said most states have anticipated the move and made changes to their insurance policies that will actually result in lower premiums for most low-income consumers purchasing insurance on ACA exchanges.

“It seems to me that California and the insurance companies have worked together to anticipate this and have worked on the assumption that this would happen,” Chhabria said of Trump’s move to cut off the payments. “To reverse course now seems like it would create further instability.”

Chhabria held off ruling at the end of the hearing, but said that he would issue a written ruling on Tuesday or Wednesday.

Chhabria said most states, anticipating the Trump administration’s move, developed a “clever” way to allow insurance companies to increase their rates in such a way that it would actually benefit consumers.

Most exchanges rate plans as bronze, silver, gold, or platinum based on the level and quality of coverage. Chhabria said that the 40 or so states that planned ahead allowed insurance companies to increase rates in the silver plans, which set the baseline for the level of tax credits the federal government pays to help lower-income consumers buy insurance. The increase in premiums for silver plans had the effect of making all other plans comparatively less expensive for people receiving tax credits under the ACA, he said.

“Why did you seek a preliminary Injunction to get these apparent benefits undone?” Chabbria asked California’s lawyer, Deputy Attorney General Gregory Brown.

Brown replied there would still be 2.1 million consumers whose premiums would go up as a result of the move, and the resulting “uncertainty and chaos” would driver insurers out of the market.

At the end of the hearing, Chhabria said that by denouncing the president’s move and running to the courthouse, California might be doing more harm than good.

Said Chhabria, “To the extent there’s chaos and confusion I wonder how much of it is California’s fault.”

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