The price tag of Trump's CSR stunt just went up ANOTHER $11 billion


The CSR Lawsuit Saga has been a continuous rollercoaster ride since 2014 at this point, with the original lawsuit (brought by John friggin' Boehner) seeing twists including one of the plaintiffs becoming one of the named defendents, and the named defendent changing at least three times as the Trump Administration went through several HHS Secretaries over the course of a few months.

The extremely short version, again: Donald Trump attempted to sabotage the ACA exchanges by pulling the plug on Cost Sharing Reduction reimbursement payments...but in doing so, unintentionally ended up:

  • NOT hurting the very people he was trying to hurt (low-income enrollees);
  • HURTING the very people he supposedly wasn't trying to hurt (middle-income enrollees), and as an added bonus...
  • INCREASING federal spending by a projected $20 billion dollars per year in increased premium subsidies

Nearly 100 insurance carriers who were stiffed by Trump out of a couple billion dollars owed to them for 2017 sued the federal government, and the judges in the cases ruled in their favor, ordering the feds to pay up. This much was completely expected and not at all out of the ordinary.

What WASN'T expected, however, was this major, dramatic development about a month ago:

Court: Feds Must Pay Community Health Options CSRs For 2017, 2018

The insurance industry notched a win Friday with a federal judge ruling that the Trump administration violated the Affordable Care Act and breached an implied contract when it cut off cost-sharing reduction payments and is responsible for reimbursing Texas non-profit plan Community Health Choices, Inc. (CHC) for not only the fourth quarter of 2017, but also for 2018, despite the silver-loading workaround that resulted in higher premium tax credits. The ruling followed a Thursday hearing, and the parties are asked...

Yes, that's right: Not one, not two, but all three judges in the various cases basically said that not only are the carriers entitled to the money owed to them from 2017, but they also have the right to demand payment for the billions of dollars owed for 2018 as well...even though they already found a workaround method of coming up with that money anyway.

The insurance carriers, who I don't think ever expected this particular turn of events, of course did exactly that, adding amendments to their original lawsuit demands to tack on the 2018 CSR payments as well. Assuming the cases end up applying to all health insurers on the ACA exchanges, and assuming the rulings aren't eventually overturned on appeal, it's conceivable that the U.S. Federal Government will have to shell out as much as $10-$12 billion more on top of the $20 billion/year in additional subsidies to cover 2018.

And that brings us to today's latest news. Once again, via Inside Health Policy reporter Amy Lotven, who originally broke this story:

Class Action Adds 2019 CSRs To Case; Other Suits Combined For Appeal

The class action lawsuit spearheaded by Wisconsin-based Common Ground Health Cooperative and involving about 90 other exchange issuers has filed an amended complaint with the Federal Court of Claims and now seeks to collect cost-sharing reduction reimbursements owed for plan years 2017, 2018 and 2019. Meanwhile, the federal appeals court has agreed to combine three other key CSR cases so that they can be heard by the same panel of judges.

...The ruling raised the prospect that the judgment fund used by the government for lawsuits could be on the hook for billions of dollars in perpetuity if no other action is taken. As Common Ground’s updated complaint points out, the Congressional Budget Office in 2017 had estimated that reimbursements would be about $7 billion in fiscal 2017, $10 billion in fiscal 2018, $11 billion in fiscal 2019 and would reach $16 billion by fiscal 2027.

Yup, 2019 has been tacked on as well. Trump's attempt to "blow up" the ACA exchanges already cost the federal government around $20 billion last year, will cost another $20 billion this year, and could potentially cost another $20 billion or so for the "double-paid" CSR payments on top of that...and that only takes us through the end of this year!

...The class action relied on government data to request a total $101.7 million for 2017, and an estimated $2.2 billion for 2018, although the 2018 figures had not yet been reconciled. Counsel also urged the court to enter judgment in their case so that the 90 or so issuers involved would be a party to the official appeal, instead of having to comment on the case on the sidelines.

It's important to note that the $2.2 billion only refers to the money owed to these particular carriers. It's conceivable that additional carriers will jump onboard these or other cases...and highly likely given that they're basically being given permission to try and double-dip. Thus, theoretically up to $11 billion or more could be up for grabs each and every year on top of the additional subsidies.

The only legal legs the government has to stand on here has nothing to do with the 2017 payments--those are absolutely owed to the carriers, free and clear. The question is whether they should have to pay CSRs for 2018 and 2019 (and 2020...and 2021...and 2022...) as well:

...The government said combining the suits so that they could be heard by the same panel of judges would be most efficient since they together address the pertinent legal questions in the case: whether the government violated the Affordable Care Act, HHS breached an implied contract in cutting the off the CSRs, and payments owed should be reduced by any additional tax credits received due to the silver-loading work around.

To reuse my own metaphor: Let's say you agreed to sell your car to me for $20,000, and separately agreed to sell me 4 motorcycles for $5,000 apiece, for a grand total of $40,000. Let's further suppose that I decided that I wasn't able to cut you the check for the $20,000, but told you I'd pay you twice as much ($10,000) for each of the motorcycles instead.

On paper, you're still receiving a total of $40,000...but legally, this judge is saying, I'd still owe you the $20,000 for the car as well, since that's what the contract we signed for the car sale stated.

In other words, in the eyes of these federal judges. just because the carriers made up the lost money by jacking up premiums instead, that doesn't cancel out the debt that the government owes them.

It's important to remember, once again, that this entire mess was caused in the first place because John Boehner and the House Republicans, instead of simply passing a one paragraph bill in 2014 to formally appropriate CSR funding, decided to file a nearly unprecedented lawsuit against the Obama Administration over it. They then spent the next two years salivating over the prospects of their lawsuit destroying the exchange under either Obama or Hillary's watch, only to scramble to delay the ruling the moment they realized that it would happen under Donald Trump instead.

They actually had a chance at digging themselves out of this mess about a year ago via the Alexander-Murray /nee Alexander-Collins stabilization deal...but then they completely blew it by insisting on throwing in even more utterly unnecessary and unacceptable anti-abortion/Hyde Amendment language. The Democrats rightly told them to go pound sand, and that's where things have stood ever since.

For the first half of this long, stupid story, CSR appropriation was something that was vitally important to Democrats. The moment that Trump lowered the boom and the carriers came up with Silver Loading, however, the tables completely turned, and CSRs have long since become far more important for the GOP than for the Dems. That becomes more true with each billion that gets spent due to Trump & the GOP's attempt to be cute.