The lawsuit is challenging how billions of dollars of federal payments were made to health insurers. Those payments are critical to the stability of the Affordable Care Act marketplaces, which are designed to help individuals buy government-subsidized health coverage. The attorneys general want to step in to defend the payments, saying there is a “sharp divide” between the administration's goals and those of states.
For months, health insurance companies have been trying to get a solid answer from Congress and President Trump's White House on the future of the payments, called cost-sharing reductions, that help lower-income Americans afford their deductibles and co-payments. Their calls for certainty have grown increasingly urgent as they face deadlines to decide whether to offer plans in states and how much to charge.
The lawsuit over the payments was originally brought by House Republicans against the Obama administration. House Republicans won the lawsuit, which was appealed. Now, it has been inherited by the Trump administration, which has been unclear about whether it will defend the payments. A status update on the case is due on Monday.
Trump and Congress have sent mixed signals about whether the payments will continue on an almost weekly basis.
The repercussions of discontinuing the payments have been made clear by insurance executives, who warn that if the funding disappears, insurers could leave markets altogether or raise their premiums significantly.
CareFirst Blue Cross Blue Shield, the largest insurer in the Mid-Atlantic, requested rate increases of more than 50 percent in Maryland's marketplaces, and chief executive Chet Burrell warned earlier this month that if cost-sharing reduction payments were to end, rates could increase by another 10 to 15 percentage points.
Anthem chief executive Joseph Swedish said in an April earnings call that the company was filing its preliminary rates with states under the assumption the cost-sharing reductions would be made. If there isn't a commitment to make the payments, Swedish said the company would change its plans.
“Such adjustments could include reducing service area participation, requesting additional rate increases, eliminating certain product offerings or exiting certain individual ACA-compliant market altogether,” Swedish said.
The National Association of Insurance Commissioners sent a letter this week to senators and to White House budget director Mick Mulvaney stressing the importance of the payments.
“This is not a theoretical argument — carriers have already left the individual market in several states, and too many counties have only one carrier remaining,” the association wrote to Mulvaney. “The one concern carriers consistently raise as they consider whether to participate and how much to charge in 2018 is the uncertainty surrounding the federal cost-sharing reduction payments.”
The motion to intervene was filed by the attorneys general of New York and California, and was joined by Connecticut, Delaware, Hawaii, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, Pennsylvania, Vermont, Washington and the District of Columbia.
“The President has increasingly made clear that he views decisions about providing access to health insurance for millions of Americans — including the decision whether to continue defending this appeal — as little more than political bargaining chips,” the attorneys general wrote in their motion to intervene in the case, saying they could not depend on the White House to represent states' interests.
“The number of uninsured Americans would go back up, hurting vulnerable individuals and directly burdening the States,” they wrote. “The wrong decision could trigger the very systemwide 'death spirals' that central ACA features, such as stable financing, were designed to avoid.”