Judge, CBO Deal Double Blow to Fight for Restoration of Obamacare Subsidies

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The president killed cost-sharing reduction payments earlier this month. It doesn’t look like the courts or Congress will overrule him. Photo: Al Drago/Bloomberg via Getty Images

It has not been a good day for those who want to reestablish (via the courts or Congress) the cost-sharing reduction payments to Obamacare insurers that Donald Trump canceled earlier this month.

California federal district court judge Vince Chhabria rejected a request from 17 states and the District of Columbia to issue an emergency order forcing the government to resume the payments pending further litigation on the issue. After arguments, he indicated he leaned toward the administration’s interpretation of the law. But more to the point, Chhabria concluded the states had figured out enough “workarounds” in response to Trump’s many threats to CSR payments that the harm to consumers had been substantially avoided.

The workarounds Chhabria relied on are complicated. The most important is called “silver loading,” in which states tell insurers to place all their CSR costs (subsidies required under Obamacare to hold down out-of-pocket costs for low-income people) into the premium for the medium-level Obamacare “silver” plans, which in turn generate very high insurance purchasing tax credits that consumers can then spend on less expensive “bronze” plans. Many will wind up with cheaper premiums than before for relatively equivalent coverage.

But in showing this ingenuity, the states undermined their own legal case. No good deed goes unpunished, it seems.

Meanwhile, as the bipartisan Alexander-Murray legislation aimed at restoring CSR payments as a congressional appropriation hung by a thread, threatened by antipathy from the president and undermined by a poison-pill alternative bill, a mediocre impact assessment by the Congressional Budget Office made its enactment look unimportant. CBO indicated Alexander-Murray would reduce the federal budget by a mere $3.8 billion over ten years (sofa-cushion money these days), and would have little or no impact on health-care premiums, either.

In the fine print, you learn that the only reason the bill wouldn’t lower premiums is that they are already pretty much set for 2018 (Alexander-Murray would help “stabilize” them in 2018, however), and the measly deficit savings are mainly attributable to the fact that the CSR payments were already included in the budget baseline, set before Trump killed them.

Any way you slice it, though, resumption of CSR payments is a more distant prospect than ever.

Judge, CBO Deal Double Blow to Obamacare Subsidies