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Court ruling could help keep Obamacare subsidies

House Minority Leader Nancy Pelosi, (D-Calif.), speaks during a protest on Capitol Hill July 26 against the GOP health care plan. (Drew Angerer/Getty Images)

A federal appeals court issued a ruling Tuesday that could help preserve a key subsidy that benefits health insurers and millions of Americans under the Affordable Care Act. The ruling could make it more difficult for the White House to carry out recent threats by President Trump to cut off the payments, giving legal standing to a new set of the payments’ ­defenders.

The U.S. Court of Appeals for the District of Columbia Circuit ruled that a coalition of 16 state attorneys general, all of whom want to preserve the subsidies, may intervene in the appeal of a lawsuit over the fate of cost-sharing subsidies — payments the government makes to insurers on behalf of about 7 million low-income Americans who receive breaks on their health plans’ deductibles and other out-of-pocket costs.

Led by the Democratic attorneys general of New York and California, the motion that the court granted is the most recent twist in the gnarled legal and political history of the subsidies. In practical terms, the ruling could make it more difficult for the Trump administration and House Republicans to abandon the payments without a court fight.

In the days since Senate Republicans failed to pass legislation that would have overturned much of the ACA, the future of the cost-sharing payment has emerged as a major issue, with insurers saying that they would markedly raise their prices for next year in the ACA’s marketplaces — or stop selling such health plans altogether — unless the subsidies continue.

Republicans have long protested the payments, and in late 2014 the GOP-led House filed a federal lawsuit against the Obama administration, contending that the subsidies were unconstitutional because Congress had not made a specific appropriation for them. Last year a federal district court ruled in the House’s favor, and the Obama administration appealed the case to the D.C. Circuit.

Health-care experts say the Affordable Care Act is stable, but President Trump and congressional Republicans could push it over the cliff into a "death spiral." (Video: Daron Taylor/The Washington Post)

Since Trump took office, it has been unclear whether the new administration would simply drop the appeal, leaving the lower court ruling intact and thus have no basis for paying the subsidies unless Congress acted to provide the money. Twice, the administration and the House have told the court they want to defer the question while they tried to reach a legislative solution. The next court date is later this month.

In the meantime, the coalition of attorneys general in favor of the payments became worried that neither party to the lawsuit was willing to defend them. In a ruling that reached the attorneys general Tuesday evening, a three-judge panel of the appeals court agreed.

In granting the motion, the judges wrote in a three-page ruling that the Department of Health and Human Services “nowhere argues in its intervention papers that it will adequately protect the States’ interests or even continue to prosecute the appeal.”

The judges also reasoned that states could be harmed if the cost-sharing payments were cut off because increased insurance ­prices could translate into more uninsured residents for whom states needed to provide health care, including at public hospitals. The ruling also alluded to the president’s recent threats to end the payments, saying that the request to join the case by the attorneys general was timely in light of “accumulating public statements by high-level officials.”

New York Attorney General Eric Schneiderman said Tuesday night that “this coalition of attorneys general stands ready to defend these vital subsidies and the quality, affordable health care they insure for millions of families across the country.”