North Carolina’s Attorney General Josh Stein is joining 18 other Democratic attorneys general in a planned federal lawsuit to block President Trump’s move to eliminate Affordable Care Act subsidies.
The legal challenge was announced by California AG Xavier Becerra and other attorneys general in a conference call Friday. The suit, to be filed in California, will ask a court to force the Trump administration to continue funding the subsidies. The payments have been made since 2014 to insurance companies to offset the cost of discounting health insurance for low-income households.
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Stein issued a statement announcing his intention to join the lawsuit, saying that Trump is obligated to enforce, not to undermine, federal law.
“I am suing President Trump today for his unlawful and reckless decision to stop payments that help hundreds of thousands of North Carolinians afford health insurance,” Stein said.
“His act wreaks havoc on the health care system,” Stein said. “It will lead to higher insurance costs for individuals, cause insurance companies to leave the individual health insurance market, increase the number of people without health insurance, and cost taxpayers $194 billion over the next 10 years.”
Trump said late Thursday that he ordered federal officials to eliminate the subsidies. Republicans argued that the subsidies were illegal because they were enacted as a federal spending obligation without a Congressional appropriation and sued the U.S. Department of Health and Human Services. A federal court agreed but the case is now pending on appeal in the U.S. Court of Appeals for the D.C. Circuit.
The subsidies, called “cost sharing reductions,” are paid to insurers, who are obligated by law to discount deductibles and other out-of-pocket costs for ACA customers whose household incomes fall between 100 percent and 250 percent of the federal poverty level. In North Carolina, more than 300,000 ACA customers have policies that qualify for the “cost sharing reductions.”
The elimination of the subsidy is effective immediately. Insurers who stop receiving the reimbursements are still obligated by federal law to offer discounted ACA plans to low-income customer as long as the insurers sell ACA policies in a given market.
Blue Cross and Blue Shield, North Carolina’s largest health insurer, said it plans to continue selling ACA policies in 2018. The Durham insurer has asked for a 14.1 percent rate increase for ACA plans in 2018 anticipating that “cost sharing reductions” might be eliminated. The rate increase would offset the financial loss caused by the elimination of the federal subsidy.
Blue Cross is the only insurer offering ACA plans in all 100 North Carolina counties. Cigna, which sells ACA plans in five counties, also said it plans to continue offering ACA plans in 2018.
However, since the subsidy elimination was effective immediately – unless a federal court heeds the AGs’ request and blocks Trump’s decision – the insurers will have no immediate way to recoup the loss of the subsidy through the end of 2017.
“It means we will not be reimbursed,” said Blue Cross spokesman Austin Vevurka. “We are still determining the implications, but again, there will be no changes in our customer rates or premiums.”