WASHINGTON — The Trump administration asked a federal appeals court Monday to delay ruling on a lawsuit that could determine whether the government will continue paying subsidies under the Affordable Care Act to health insurance companies for the benefit of low-income people — effectively prolonging uncertainty that is already rattling the health law.
The request could further destabilize insurance markets just as insurers are developing rates and deciding whether to participate in 2018.
Insurers are supposed to submit their proposals to the federal government by June 21 and have already filed rate requests with several states. Loss of the cost-sharing subsidies, they say, could lead them to increase premiums by 15 percent to 20 percent or more, on top of any increases they might seek for other reasons.
But in recent statements, the administration had committed to making subsidy payments for this month and no further.
“In merely delaying their suit, Republicans cynically continue to sow uncertainty in the health coverage of millions of Americans,” said Rep. Nancy Pelosi of California, the House minority leader and an architect of the health law. “At a critical period when insurers are deciding premiums for next year, Republicans are pouring uncertainty into the health insurance marketplaces.”
In a report filed Monday with the U.S. Circuit Court of Appeals for the District of Columbia, the Trump administration and House Republican leaders asked that the court case be held in abeyance for another 90 days.
“The parties continue to discuss measures that would obviate the need for judicial determination of this appeal, including potential legislative action,” the report said.
“We continue to work with the Trump administration on a solution,” said AshLee Strong, a spokeswoman for Speaker Paul Ryan.
Insurers responded to the administration’s delay by emphasizing how the uncertainty has been harming the health insurance market.
“We need swift action and long-term certainty on this critical program,” Cathryn Donaldson, a spokeswoman for America’s Health Insurance Plans, the industry’s main trade group, said in a statement. “It is the single most destabilizing factor in the individual market, and millions of Americans could soon feel the impact of fewer choices, higher costs and reduced access to care.”
The future of the subsidies has been in doubt since a federal district judge ruled in May 2016 that the government did not have authority to make the payments because Congress had not appropriated the money.
Democrats and some Republicans say Congress could clear up the uncertainty by providing the money. But the issue has become entangled in a partisan battle over Republican efforts to repeal major provisions of the health care law. The House passed a repeal bill early this month; the outlook in the Senate is unclear.
Democrats say President Donald Trump has been sabotaging the health law. Republicans say the law was already collapsing, with insurance markets in turmoil in many states.
“Clearly by today’s action and their decision to make the next payment, the White House realizes that eliminating cost-sharing reduction payments would cause chaos in the markets, and they would get the blame,” Sen. Chuck Schumer of New York, the Democratic leader, said on Monday. “Unfortunately, by kicking the can down the road once again, the administration is continuing to sow uncertainty in the markets that will hurt millions of Americans.”
He added, “Instead of hemming and hawing, they ought to step up to the plate and say once and for all that they will make these payments permanently, which help millions of Americans pay less for their health care.”
The legal fight stems from a lawsuit that the House of Representatives filed in November 2014 against the Obama administration. In May last year, Judge Rosemary M. Collyer of the U.S. District Court here ruled for the House, finding that the Health and Human Services Department had illegally paid billions of dollars in subsidies to health insurance companies.
The subsidies reimburse insurers for reducing deductibles and other out-of-pocket costs for low-income consumers — 7 million people this year.
Collyer said the spending violated the Constitution because Congress had never provided explicit authority for it. In particular, she said, the payments violated Article I of the Constitution, which states, “No money shall be drawn from the Treasury, but in consequence of appropriations made by law.”
“An appropriation must be expressly stated; it cannot be inferred or implied,” Collyer declared.
President Barack Obama requested money for the “cost-sharing” subsidies as part of a budget he sent Congress in April 2013. Congress never approved the request. But the Obama administration saw the subsidies as essential to the success of the health care law and began making the payments in early 2014, using money from a separate account established for tax refunds and tax credits.
Collyer ordered a halt to the payments last year, but suspended her order to allow the government to appeal.
The case has created an awkward situation for the Trump administration and for Republicans in Congress who initiated the lawsuit.
If the government continues paying the subsidies, it will, in effect, prop up the heath care law, even though Trump and congressional Republicans want to tear it down. On the other hand, if the government stops paying the subsidies, many insurers say they would sharply increase premiums or pull out of Affordable Care Act marketplaces, and Democrats would surely accuse Republicans of taking coverage away from millions of Americans.
The Trump administration has sent mixed signals, confusing insurers and consumers alike. The Health and Human Services Department said last month that it would continue paying the subsidies while the lawsuit was being litigated. But Trump has threatened to withhold the subsidies as a way to force Democrats to negotiate with him on a replacement for the health act.
Several senior House Republicans have said they are willing to appropriate money for the subsidies, but the administration does not want that.
Mick Mulvaney, director of the White House Office of Management and Budget, refers to the subsidies as “Obamacare bailout payments” and said May 2 that the administration had not made any commitment to pay them beyond this month. Trump said he could stop the payments “anytime I want.”
The Congressional Budget Office estimates that the cost-sharing subsidies will cost $7 billion this year and $135 billion from 2018 to 2027.
The cost-sharing subsidies are available to people with incomes from 100 percent to 250 percent of the poverty level ($11,880 to $29,700 a year for an individual).