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Trump May Face An Early Test On Obamacare That Could Tell Us A Lot

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AP Photo / Alex Brandon

The lawsuit was filed by House Republicans against the Obama administration in 2014, claiming that the U.S Treasury is unconstitutionally spending money on Obamacare subsidies to insurance companies that haven't been appropriated by Congress. The subsides, often referred to as cost-sharing payments, help insurers keep deductibles and other out-of-pocket costs down for low-income consumers. House Republicans scored a notable victory in May when a federal district judge ruled that they had the standing to sue the administration and that the payments were indeed illegal, though the judge stayed the decision to allow the administration to appeal the ruling, which the administration did.

The final briefing in the appeals court case is due just a day before Trump is inaugurated. The House GOP's filing Monday asked the court to pause the proceedings until late February, at which point, congressional Republicans and the Trump administration will tell the court whether they have come to an agreement on the cost-sharing payments, or if they will continue the battle over them in court.

The calculus facing the Trump administration is complicated, and it’s hard to tell how much attention his lawyers are even paying to the lawsuit. However, last week, when TPM inquired with Ryan's office about their options, his spokeswoman AshLee Strong said the Speaker's office was “in contact with the Trump transition team as we consider the House’s options.” The Trump transition team didn't respond to TPM's inquiries Monday regarding their next steps.

“Legally there are paths the Trump administration can take to continue making the cost-sharing payments, and there are paths it could take to lead the cost sharing payments to stopping,” said Nicholas Bagley -- a professor at University of Michigan Law School who specializes in administrative law, regulatory theory, and health law -- in an interview with TPM last week, before the House GOP's latest action.

“If they simply stop making the cost sharing payments, we will have a very strong signal that the Trump administration is very committed to undoing the Affordable Care Act, no matter the pain it might inflict or the political costs in doing so,” Bagley said.

For foes of Obamacare, the next steps are obvious. Once Trump takes office, he can simply end the federal government's fight with the House on the issue and stop the cost-sharing payments.

“This a costless move for Trump to make, because it doesn’t affect anyone except for the insurance companies,” said Joshua Blackman, a professor South Texas College of Law in Houston who has written books critical of the ACA. His comments to TPM also came before the House GOP's request that the proceedings be paused, but he speculated that Republicans would seek to delay the next steps into the case to buy Trump time to stop the cost-sharing payments.

Such a scenario would involve Trump agreeing to drop the federal government’s appeal of the case and submitting to the district court’s ruling. Or the House GOP could withdraw the lawsuit with the understanding that administration would stop making the payments.

Other legal and policy experts TPM interviewed last week argued that ending the cost-sharing payments would still stand to do some damage to the health insurance marketplaces and thus bring political retribution. Insurers in some places may convince the state’s insurance commissioners to let them jack-up their premiums to make up for the loss, while others may just flee the individual markets altogether. Consumers would be likely left with fewer, and possibly more costly, insurance options.

“I don’t see any option here that isn’t bad for insurers or consumers or both,” said Timothy Jost, a professor at the Washington and Lee University School of Law, who is supportive of the ACA.

In that sense, it’s similar to the conundrum facing Republicans on the larger ACA repeal: Move forward with repeal right away to please the conservative base and risk upsetting voters who would lose their insurance without a GOP replacement in place? Or wait until an alternative plan is also ready to blunt some of the damage of an Obamacare repeal, and hope that the caucus can come together on a replacement?

If the Trump administration opts to continue the payments at the center of House v. Burwell -- and either fight the House in the case, or make a deal with the Republicans to allow the payments to continue -- the GOP may be trending towards the latter path. Speaking of that potential scenario, Bagley said, “We have a signal that [the Trump administration] is inclined to work with Congress to find a more or less orderly way of undoing an Affordable Care Act and moving to a Republican alternative.”

The senior GOP aide described Monday's request for more time to be "in anticipation of congressional Republicans' efforts to repeal and replace Obamacare."

The Obama administration did not sign on to the House GOP's filing. If the appeals court denies the Republicans' request and the current schedule holds, the House final brief is due in late December, and the Obama administration will file its response Jan. 19. That means that an appeals court ruling could come very early in the Trump administration, unless he and House Republicans agree on a path that would stop the case from proceeding.

About The Author

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Tierney Sneed is a reporter for Talking Points Memo. She previously worked for U.S. News and World Report. She grew up in Florida and attended Georgetown University.