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A federal judge declined Wednesday to force the Trump administration to make critical payments to health insurers under the Affordable Care Act, finding that although the law requires insurance companies be paid, it’s unclear whether Congress has actually set aside money for these payments.

U.S. District Judge Vince Chhabria of the Northern District of California, appointed by President Barack Obama, said in his order that the requirements for a preliminary injunction forcing the government to pay up were not met because the Trump administration made more convincing legal arguments that the cost-sharing reduction subsidy program payments were not appropriated by Congress.

A group of 17 Democratic attorneys general, including California’s Xavier Becerra and New York’s Eric Schneiderman, sued the Trump administration Oct. 13 to force the government to continue the payments. But Chhabria found that forcing the administration to make the payments would be “counterproductive” thanks to steps the states had made in anticipation of Trump’s move to cut off the subsidies.

(Related: We Planned for 2018 ACA Subsidy Changes: Centene)

“State regulators have been working for months to prepare for the termination of these payments,” Chhabria wrote. “And although you wouldn’t know it from reading the states’ papers in this lawsuit, the truth is that most state regulators have devised responses that give millions of lower-income people better health coverage options than they would otherwise have had.”

Trump announced earlier this month that his administration would end the government payments, which cover out-of-pocket expenses and co-payments for low-income people. In their lawsuit, the states argued the administration flouted the Administrative Procedures Act by ending the subsidies suddenly. They said cutting off the payments will create chaos in the insurance markets, though Chhabria seemed skeptical of that claim in a hearing Monday.

The government argued the payments were never authorized by Congress because they were not appropriated and are therefore illegal. When the administration abandoned the payments, Attorney General Jeff Sessions wrote in a memo that “Congress has the power of the purse, and it is up to Congress to decide which programs it will and will not fund.”

In the hearing, Chhabria noted the state of California and several others expected the Trump administration to cut off the payments and already made plans with insurance companies on how to adjust. Chhabria seemed concerned that forcing the payments would create further instability.

The Democratic attorneys general also intervened in another suit over the payments, initiated by the majority Republican House of Representatives in 2014 against the Obama administration, to defend the subsidies. That case remains stalled in the U.S. Court of Appeals for the District of Columbia, and the House is expected to tell the court what it plans to do next by Oct. 30. In the lower court, however, U.S. District Judge Rosemary Collyer of the District of Columbia sided with the House, and now the Trump administration.

In a press statement Wednesday, California Attorney General Xavier Becerra said that the ruling did not signal the end of the states’ case.

“The judge made clear in his ruling that the ACA is the law of the land,” Becerra said. “Without an emergency order halting the Trump action, swift action in this litigation becomes even more compelling.”

—-Read Judge Thinks Health Insurers Could Still Get 2017 CSR Money on ThinkAdvisor.


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