CHA News Article

Settlement Reached in Affordable Care Act Cost-Sharing Reduction Subsidies Case

On Friday, the House of Representatives, the Trump administration and attorneys general from multiple states — including California — reached a conditional settlement agreement in a federal court case concerning the legality of cost-sharing reduction payments. 

As previously reported in CHA News, the case, The United States House of Representatives v. Thomas E. Price, et al., challenges whether an appropriation is necessary to fund the Affordable Care Act’s cost-sharing reductions. The district court previously issued an injunction prohibiting reimbursement for cost-sharing reductions, pending congressional appropriation for such payments; defendants, along with the intervenor-states, appealed this ruling. 

The procedural aspects of the settlement are complicated. Basically, the settlement is conditioned on certain actions being taken by both the Court of Appeal and the district court. If either court fails to take the actions outlined in the settlement, the settlement will have no force or effect.

In essence, the actions that need to be taken under the settlement agreement for it to be effective are as follows:

The district court would first issue a ruling indicating that if the case is sent back to it, the district court will vacate the portion of its final order providing that “reimbursements paid to issuers of qualified health plans for the cost-sharing reductions mandated by [the ACA] are ENJOINED pending an appropriation for such payments.” The district court can only “indicate” that it will rule this way because it lost the power to change its ruling when the case went up to the Court of Appeals. If this occurs, the Court of Appeals, where the case is currently pending, is asked to send the case back to the district court, which would then actually do what it had previously indicated it would do: vacate that portion of its previously-issued final order enjoining the cost-sharing reduction reimbursement pending congressional appropriation. In addition to thereby eliminating the district court’s injunction, the settlement agreement provides that the district court’s conclusion that the House of Representatives could bring the lawsuit in the first place “should not in any way control the resolution of the same or similar issues should they arise in other litigation between the House and the Executive Branch.”

If all occurs as contemplated by this settlement agreement, the future of the cost-sharing reduction payments will rest with Congress, as the Trump administration has decided to stop the payments pending congressional appropriation.