By: Melissa Shimizu
President Trump announced several weeks ago that the federal government would stop making subsidy payments to insurers who sell coverage under the ACA, while simultaneously releasing another executive order aimed at weakening the statute. Now that some time has passed and we have a better sense of the implications of these actions, what do employers need to know about this Oct. 12 one-two punch?
CONGRESS AND COURTS SPAR OVER SUBSIDY PAYMENT SYSTEM
First, with regard to the subsidy payments, the federal government provides these subsidies to insurers to reduce low-income individuals’ cost of purchasing coverage on exchanges. It is estimated that these subsidies amounted to $7 billion this year. Ending these subsidy payments could cause insurers to cease providing coverage through the exchanges, which would make health coverage more expensive, and likely unaffordable, for a number of low-income Americans. Because of this dynamic, the president’s recent announcement raised concerns that exchange premiums would increase even more than anticipated.
Following President Trump’s announcement, a number of states jointly filed suit seeking a preliminary injunction to block his decision. The lawsuit claims that the administration violated federal law by ordering the end of these subsidies. On Oct. 25, a California federal court denied the preliminary injunction and indicated that, based on a brief review of the issue, the Trump administration has a stronger legal argument.
Meanwhile, on Oct. 17, Senators Patty Murray (D-WA) and Lamar Alexander (R-TN) sponsored a bipartisan agreement that would continue the subsidies for two more years. If this effort can get sufficient support in Congress, it could help to stabilize prices, even if only temporarily. Between Congressional efforts and the courts, the future of these subsidies remains unknown.