published Oct 25, 2017 5:02:09 PM, by Joel Rosenblatt and Andrew Harris
(Bloomberg) —

A federal judge rejected a bid by Democratic state officials to temporarily block the White House from ending so-called cost-sharing reduction payments to health insurers under the Affordable Care Act.

A coalition of 19 Democratic attorneys general, led by California’s Xavier Becerra and New York’s Eric Schneiderman, sought to force the federal government to continue to make the payments that help insurance companies lower out-of-pocket costs for poorer policyholders.

U.S. District Judge Vince Chhabria in San Francisco disagreed with the states, saying most had time to plan for the end of cost-sharing payments and had adjusted accordingly, so restoring the payments could do more harm than good.

“If the payments were restored,” Chhabria said in the Wednesday order, “such a remedy would likely cause millions of lower-income people across the country who purchase insurance on the exchanges to be worse off than if today’s status quo is preserved.”

The AGs argued immediate elimination of the payments would inflict multimillion-dollar losses on carriers and compel them to raise premiums, potentially forcing people to forgo coverage. They contend the ACA requires those payments be made, even though a U.S. judge in Washington disagreed in a 2016 decision that is currently under appeal.
While the court declined to restore the payments immediately, the lawsuit will proceed, Becerra said in a statement after the ruling.

“The actions by the Trump administration undermine critical payments that keep costs of health care affordable for working families,” he said. “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.”

Bipartisan Effort

Chhabria’s ruling arrives as federal lawmakers craft bipartisan legislation aimed at stabilizing the American health insurance market and continuing the CSRs for two more years. That effort, which is opposed by President Donald Trump, is being led by Tennessee Republican Senator Lamar Alexander and Washington Democrat Patty Murray.

The annual ACA enrollment period begins on Nov. 1. The attorneys general, who in August won permission to defend the subsidies in a case before the U.S. Court of Appeals in Washington, filed a separate lawsuit on Oct. 13, after the Trump administration announced it would halt the payments immediately.

“If the states are so concerned that people will be scared away from the exchanges by the thought of higher premiums, perhaps they should stop yelling about higher premiums,” Chhabria wrote. “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.”

The case is California v. Trump, 3:17-cv-05895, U.S. District Court, Northern District of California (San Francisco)

To contact the reporters on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net ;Andrew Harris in Washington at aharris16@bloomberg.net To contact the editors responsible for this story: Elizabeth Wollman at ewollman@bloomberg.net Peter Blumberg