President Trump’s decision to halt key Obamacare subsidies — a decision first reported by Politico and announced in a late night press release from the White House Thursday — has now been crystalized in legal documents filed Friday morning in the legal case brought by House Republicans against the subsidies in 2014.
The filings include a notice from the Department of Health and Human Services that the subsidies, known as cost sharing reduction payments, will be stopped immediately. The next payments were scheduled for Oct. 18.
The payments subsidize insurers for keeping out-of-pocket costs down for low-income consumers, as mandated by the Affordable Care Act. House Republicans had argued the payments were illegal because they were not appropriated by Congress.
With Friday’s notice is a letter from Attorney General Jeff Sessions to the relevant department secretaries explaining the legal justification for stopping the payments.
In it, Sessions quotes the Supreme Court decision in King v. Burwell — a lawsuit against the Affordable Care that resulted in a ruling favorable to the law — and also notes that in 2014 President Obama’s budget proposal sought to appropriate the payments, before his administration changed its position that the payments did not need appropriating.
The legality of the payments was always considered murky; however, legal experts were skeptical that House Republicans had the standing to bring the lawsuit. Many expected that the decision from a district court against the payments would be overturned by an appeals court, where the case currently sits. The payments were allowed to continue while the district court decision was appealed by the Obama administration, and the case was put on hold once the Trump administration took over.
Trump has been explicit in his desire to use the payments as a bargaining chip to pressure Democrats to cooperate with his effort to repeal Obamacare. He reiterated that Friday morning:
The Democrats ObamaCare is imploding. Massive subsidy payments to their pet insurance companies has stopped. Dems should call me to fix!
— Donald J. Trump (@realDonaldTrump) October 13, 2017
The decision to halt the payments comes after insurers have set their premiums for 2018 plan year. Some insurers priced their premiums for the scenario that the payments were stopped, but others will be on the tab for the shortfall. There is the chance that some insurers will try to exit the ACA exchanges altogether due to the termination of the payments.
Friday’s filings are by no means the end of the legal battle surrounding the payments. A group of Obamacare supporters have already intervened in the case with intent of defending them and seperate lawsuits seeking that the payments continued are expected.
Read the filings below: