CSR Payment Update

CSR Payment Update


As we discussed in our October 18 post, President Trump recently announced that his administration would cease making cost-sharing reduction (CSR) payments to health insurance companies. This prompted attorneys general in 19 states, led by Xavier Becerra of California and Eric Schneiderman of New York, to file suit against the Trump administration on grounds that the decision was “contrary to the law” and “arbitrary and capricious.” On October 25, U.S. District Judge Vince Chhabria denied a motion for a preliminary injunction filed by the attorneys general, allowing President Trump’s decision to withhold CSR payments to stand--at least for now. The attorneys general argued that the Affordable Care Act did create a permanent appropriation for CSR payments, while the administration argued that no such permanent appropriate had been made. In denying the attorneys generals’ preliminary injunction, Judge Chhabria held, “[o]n the merits, it's a close and complicated question, even if the Administration may seem to have the better argument at this stage.” A case management conference will take place on November 21 in order to schedule a full adjudication of the case at a later date.         

The above case may become moot depending on the success of two proposals in Congress. First, Senator Lamar Alexander (R-TN) and Senator Patty Murray (D-WA), along with 12 Republican and 12 Democrat cosponsors, presented legislation that would fund the CSR payments through 2019. On October 25, the Congressional Budget Office announced that the Alexander-Murray bill would reduce the federal deficit by almost $4 billion over the next ten years, but would likely not affect health insurance premiums for 2018 or substantially alter the number of people covered by health insurance. While the bill seems to have wide support, Senate Majority Leader Mitch McConnell (R-KY) announced that he would bring the proposal to the floor for a vote only if President Trump would sign the bill.

A second proposal has been introduced by Senator Orrin Hatch (R-UT) and Representative Kevin Brady (R-TX). Their proposal would fund CSR payments through 2019, but would also impose additional restrictions on health insurance companies to prevent “double dipping”--i.e., where the insurance company profits from both the CSR payments and from higher premiums. Further, the proposal would suspend the individual mandate from 2017 to 2021 and suspend the employer mandate from 2015 to 2017, exempting employers from any/all penalties for failure to provide coverage based on the mandate. Waller will closely monitor this legislation and the litigation arising from President Trump’s decision to end CSR payments.

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