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July 20, 2018

Judge dismisses suit that sought to force White House to resume CSR payments

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    A federal judge on Wednesday dismissed a lawsuit challenging the Trump administration's decision to halt the Affordable Care Act's (ACA) cost-sharing reduction (CSR) payments, in response to a request from state attorneys general (AGs) to put the suit on hold.

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    In October 2017, AGs from 17 states and Washington, D.C., filed a lawsuit seeking an emergency motion to require the Trump administration to resume making the cost-sharing reduction payments. The AGs argued that the administration's decision had prompted some insurers to request new premium rate hikes for the 2018 coverage year, while other insurers had already raised premiums amid uncertainty over whether the payments would be made. 

    U.S. District Court Judge Vince Chhabria rejected the request for an emergency motion, saying the Trump administration did not have to make the payments while the lawsuit proceeds.

    States seek to place lawsuit on hold

    On Monday, the state AGs in a court filing asked Chhabria to put the suit on hold, noting that a workaround known as "silver-loading" had largely succeeded in protecting consumers from higher premium costs.

    Under silver-loading, insurers chose not to spread the cost of CSR-related premium increases across all tiers of ACA health plans—which range from "bronze" to "platinum"—but rather to pack the increases into silver-level plan premiums. That practice took advantage of a quirk in the ACA: The law uses the premiums for silver-level plans to determine the amount of federal subsidies available to individuals with annual incomes below 400% of the federal poverty level. As a result, when premiums for silver plans rose sharply, federal subsidies rose along with them.

    While experts credit silver-loading with helping to stabilize the ACA's exchanges this year, millions of people who did not qualify for federal subsidies felt the full effects of premium increases, which averaged more than 30% for federal exchange plans.

    The AGs in their filing wrote that that strategy "provided some stability to help ensure a functioning insurance market."

    The states noted, however, that the Trump administration has signaled it could bar insurers from the practice in future years. For instance, CMS Administrator Seema Verma in an April call with reporters suggested the administration was considering banning the practice. In June, HHS Secretary Alex Azar said his department does not plan to bar insurers from silver-loading in 2019, as stopping the practice "would require regulations, which simply couldn't be done in time for the 2019 plan period." But Azar declined to say whether HHS is considering banning the practice in the future, saying, "It's not an easy question."

    As such, the states asked Chhabria to put the suit on hold.

    The AGs wrote, "In a situation such as this, the States would normally move to dismiss the present action, without prejudice to their ability to file a new complaint when the circumstances changed." They added, "Here, however, the States respectfully suggest that the better course would be for the Court to stay these proceedings but to retain jurisdiction over them, at least for the time being."

    Chhabria declined to place the case on hold, however, and dismissed the AGs filing.

    According to Associated Press, the Department of Justice had no comment on the decision (AP/Modern Healthcare, 7/18;  Porter, HealthLeaders Media,7/17; AP/Chicago Sun Times, 7/17).

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