Health Insurer Sues Trump Admin Over Slashed Subsidies For Low-Income Patients

on December 22, 2017 in Washington, DC.
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In the wake of a surprisingly robust open enrollment period, the small health insurance co-op Maine Community Health Options (MCHO) became the first insurer in the country to sue the Trump administration over millions in subsidies that the federal government cut off in October.

The text of the Affordable Care Act, MCHO argued, guarantees the cost-sharing reduction (CSR) payments to insurance companies to compensate them for having to accept patients regardless of their health status. Following the Trump administration’s move to terminate the payments, insurers still have to provide the subsidies to low-income enrollees, but they no longer get reimbursed. A December report from Maine’s Bureau of Insurance says MCHO lost $1.9 million in October alone due to the loss of the CSRs, and the company’s lawsuit says it lost out on at least $5.6 million for the remainder of 2017.

The federal lawsuit, filed in late December in the U.S. Court of Federal Claims in Washington, D.C., is the first to hit the Trump administration on the CSR cuts since more than a dozen left-leaning states banded together in October to sue. (A California federal court declined their request to force the government to pay up, saying the states had not proven their residents would face “immediate harm.”)

Since then, a topsy-turvy health policy year got even stranger. The Trump administration’s move terminating the CSR payments actually made plans cheaper for millions of people across the country, though the smaller unsubsidized population was hit by painful premium hikes.

Now, MCHO, the largest writer of individual health insurance in Maine and one of just two companies offering plans on the individual market, says it and other insurance companies were harmed as well.

“Health Options is still required by law to provide cost-sharing reductions to eligible insureds, despite not receiving the mandated reimbursement from the Government. This has caused Health Options and other [qualified health plan] issuers to suffer large financial losses,” the lawsuit states. “It also leads to instability in the insurance markets and hinders Health Options’ and other QHP issuers’ ability to design and price plans effectively for the ACA exchanges.”

Though MCHO is not outright threatening to leave Maine over the loss of the payments, the company cites a study in its lawsuit that predicts that “many insurers might react to the end of subsidy payments by exiting the ACA marketplaces.”

Read the full complaint below:

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