Appeals

Dem states can defend ObamaCare subsidies, court rules

Perry Chiaramonte

An appellate court has allowed a group of Democratic state attorneys general to defend and uphold subsidy payments to insurance companies under ObamaCare -- a critical part of funding that President Trump has threatened to slash.

The U.S. Court of Appeals for the District of Columbia Circuit granted a motion filed by a coalition of the 16 attorneys general led by California's Xavier Becerra and New York's Eric Schneiderman, Reuters reported.

“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,” Schneiderman said in a statement Tuesday.

Trump has been frustrated that he, along with Republicans in Congress, have been unable to keep campaign promises to repeal and replace the Affordable Care Act (aka ObamaCare), which has led him to threaten to stop making cost-sharing subsidy, or CSR, payments.

“The president is working with his staff and his Cabinet to consider the issues raised by the CSR payments,” a White House statement said, according to Reuters.

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 legal bind.

Law 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.

“Trump thinks he’s holding all the cards. But Democrats know what’s in his hand, and he’s got a pair of twos,” Nicholas Bagley, a University of Michigan law professor, told the Associated Press. “[Democrats] aren’t about to agree to dismantle the Affordable Care Act just because Trump makes a reckless bet.”

President Obama signed the Affordable Care Act into law in March 2010. It is considered the signature legislation of Obama’s presidency, although both parties have acknowledged the law is flawed.

For months, Trump has been threatening to stop payments that reimburse insurers for providing required financial assistance to low-income consumers, reducing their copays and deductibles.

Administration officials say the decision could come any day.

The CSR helps Americans with low incomes by providing subsidies to help cover out-of-pocket medical expenses, the Washington Times reported.

Without the payments, insurers have threatened to raise their premiums by 20 percent in 2018 because it is required of them to pay those costs, whether the government pays them in whole or not.

“The States have shown a substantial risk that an injunction requiring termination of the payments at issue here … would lead directly and imminently to an increase in insurance prices, which in turn will increase the number of uninsured individuals for whom the States will have to provide health care,” the three-judge panel on the D.C. Circuit Court of Appeals wrote in its decision.

The panel offered further explanation on its reasoning, saying it was based in part on the fact that the Justice Department hadn’t made public whether it sided with the states’ position.

“The States have raised sufficient doubt concerning the adequacy of the Department’s representation of their interests,” the panel wrote. “Indeed, the Department nowhere argues in its intervention papers that it will adequately protect the States’ interests or even continue to prosecute the appeal.”

It also cited “accumulating public statements by high-level officials both about a potential change in position” in terms of the appeal.

The Associated Press contributed to this story.

Perry Chiaramonte is a reporter for FoxNews.com. Follow him on Twitter at @perrych