A federal court judge denied the effort by California Attorney General Xavier Becerra and his counterparts in 17 other states and the District to force the Trump administration to maintain cost-sharing payments under the Affordable Care Act. (Rich Pedroncelli/AP)

A federal judge in California on Wednesday denied a request from 19 attorneys general across the country to force the Trump administration to resume funding of cost-sharing payments under the Affordable Care Act.

The ruling leaves intact President Trump's decision earlier this month to immediately end the payments that reimburse insurers for discounts the law requires them to give lower-income customers with health plans through ACA marketplaces. The attorneys general, from 18 states and the District, were seeking a temporary order that would have maintained the funding while the rest of the case is decided.

In his decision, Judge Vince Chhabria of the U.S. District Court for the Northern District of California wrote that resuming the payments to insurers “would be counterproductive.”

Chhabria pointed out that most states’ insurance regulators had already prepared for a possible end to the money, by allowing companies to charge higher rates for the coming year. “Although you wouldn’t know it from reading the states’ papers in this lawsuit,” he wrote, “the truth is that most state regulators have devised responses.”

The judge did not decide the suit’s core question: whether the federal government must continue funding the cost-sharing reduction (CSR) payments without a specific congressional appropriation.

“Both sides have reasonable arguments,” Chhabria said. But, he said, “it initially appears that the Administration has the stronger legal position” because the 2010 law did not explicitly provide permanent funding for the CSR payments in the same way it did for a separate subsidy that helps people with ACA health plans afford their monthly premiums.

The court ruling was one of several developments related to the health-care law on Wednesday. It coincided with a review by the internal watchdog for the Health and Human Services Department of one of the administration's first actions on the law, as well as a forecast by Congress's budget analysts of the effects of a bipartisan Senate plan to try to stabilize the ACA's marketplaces.

According to the HHS inspector general, hours after they were briefed on outreach activities for the final days of the last Affordable Care Act enrollment season, temporary political appointees at the department abruptly canceled those plans without assessing the impact.

That cancellation in January was marked by confusion over whether the appointees wanted to stop all or part of federal contracts for outreach and ended up costing the government $1 million that could not be recouped, the inspector general found. The report was released on Wednesday by two Democratic senators who had sought the inquiry.

Coming exactly a week before the start of the 2018 enrollment period for ACA plans, the findings circle back to Trump’s first week in power and the beginnings of what has evolved into a succession of administration moves widely perceived to be undercutting the insurance marketplaces.

The inquiry found that, as part of their transition briefings with an early set of HHS appointees known as a “beachhead team,” career officials sent an email Jan. 25 that detailed the work still to be done by outside contractors to encourage consumers to buy ACA coverage before that enrollment period ended. The email provided information to be discussed at a staff meeting the next morning.

After the meeting, the inquiry found, a political appointee told the department's public affairs officials to cancel two outreach contracts. The directive was soon altered to cancel only the outreach activities for which the government could not recover payment. However, one contractor already had halted $1.1 million worth of work that could not be recouped.

The review also found that the career officials stressed how important the closing outreach activities were to attracting young, healthy customers to the marketplaces. But “the materials did not contain a full analysis of the potential impact that canceling outreach might have on enrollment,” and officials have not since assessed the impact.

Meanwhile, the Congressional Budget Office found that proposed bipartisan Senate legislation would lower the federal deficit by nearly $3.8 billion during the next decade and would not affect the number of people with health insurance.

The assessment of the plan, written by the chairman and top Democrat on the Senate Health, Education, Labor and Pensions Committee, forecasts no fiscal effect from one of its main features: resuming for two years the cost-sharing payments Trump has stopped.

That central aspect of the bill would not itself affect the deficit, the nonpartisan budget analysts conclude, because the CBO had been assuming those payments would continue.

But the analysts still predict the relatively small savings because health insurers that raised their prices for the coming year to compensate for the funding loss would then need to give the government some kind of rebate for charging too much.

The score arrived slightly more than a week after Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) introduced legislation they had begun to negotiate after the failure of a succession of Republican-only Senate bills to dismantle major parts of the 2010 health-care law. The focus of their negotiations was to strengthen the ACA marketplaces that are designed for consumers who cannot get affordable health benefits through a job.

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