Federal Court Gives States A Say In Trump’s Battle Over Obamacare Subsidies

President Donald Trump stands as he waits to bestow the nation's highest military honor, the Medal of Honor to retired Army medic James McCloughan during a ceremony in the East Room of the White House in Washington, Monday, July 31, 2017. McCloughan is credited with saving the lives of members of his platoon nearly 50 years ago in the Battle of Nui Yon Hill in Vietnam. (AP Photo/Pablo Martinez Monsivais)
In this July 31, 2017, photo, President Donald Trump pauses during a ceremony in the East Room of the White House in Washington. Trump’s threat to stop billions of dollars in government payments to insurers and for... In this July 31, 2017, photo, President Donald Trump pauses during a ceremony in the East Room of the White House in Washington. Trump’s threat to stop billions of dollars in government payments to insurers and force the collapse of “Obamacare” could put the government in a tricky legal situation. Legal experts say he’d be handing insurers a solid court case, while undermining his own leverage to compel Democrats to negotiate, especially if premiums jump by 20 percent as expected after such a move. (AP Photo/Pablo Martinez Monsivais) MORE LESS

As President Donald Trump mulls sabotaging Obamacare’s exchanges by cutting off billions in cost sharing reduction payments to insurers—payments that are the subject of an ongoing federal lawsuit that began when the Republican-controlled House of Representatives sued the Obama administration in 2014—a new court action this week makes it harder for him to unilaterally ending the subsidies.

On Tuesday night, the U.S. Court of Appeals for the District of Columbia Circuit granted a motion filed by 16 states—led by New York and California—who want to be intervening parties in the lawsuit around the legality of the payments. This means that even if Trump decides to drop the government’s defense of the insurer subsidies, the states can take up the mantle.

The payments, which clock in around $7 billion per year, help insurers cover low-income people with the severe health needs. Without them, insurers say they would have to drastically hike rates or leave certain areas altogether, potentially sending the market into a death spiral. The Obama administration defended the subsidies when the case first began, but after Trump took office it was no longer clear whether there would be a party to the case willing to fight for them.

New York Attorney General Eric Schneiderman, who in the motion argued that the Department of Health and Human Services can’t be trusted to represent his states’ best interest in court, said the ruling is “good news for the hundreds of thousands of New York families that rely on these subsidies.”

“It’s disturbingly clear that President Trump and his administration are willing to treat them as political pawns,” he wrote. “But this coalition of attorneys general stands ready to defend these vital subsidies and the quality, affordable health care they ensure for millions of families across the country.”

The state attorneys general intervening in the lawsuit are mostly Democrats, but even staunch conservatives on Capitol Hill have been pleading with the Trump administration to keep making the payments for now. Though Trump could still drop the appeal of the lawsuit or direct HHS to cut off the CSR payments, the court has now given states a way to challenge that decision.

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