Health Care

California v. Trump

In California v. Trump, the U.S. District Court for the Northern District of California considered whether the Trump Administration could lawfully refuse to reimburse health care insurers for cost-sharing reductions as required by the Patient Protection and Affordable Care Act (“ACA”).

Case Summary

The ACA was designed to achieve near-universal health insurance coverage. Critical to ensuring that both health insurance and health care would be affordable for low- and middle-income Americans, the ACA created two complementary benefits: premium tax credits to help make insurance affordable, and subsidies to reduce cost-sharing (e.g., deductibles and copayments) to help make health care affordable.  Congress gave insurers a legal right to payment from the federal government for the amount of those mandatory cost-sharing reductions. Despite the mandatory requirement that the federal government provide these reimbursements, the Trump Administration announced in early October 2017 that it would stop making such reimbursement payments on the theory that Congress neglected to appropriate funds for them. Along with 17 other States, California sued, claiming that this refusal was unlawful and directly subverted the ACA.

CAC filed a friend-of-the-court brief on behalf of members of Congress explaining that the plaintiff states are right.  As amici know from their involvement in the debates and deliberations over the ACA in Congress, both the premium tax credits and the cost-sharing reductions are critical to the effective operation of the ACA’s legislative plan. The law therefore established a unified system for payment of both the tax credits and the cost-sharing reductions, and it funded them both out of the same permanent appropriation. Further, as the brief explained, subsequent actions by Congress served to confirm what everyone understood at the time the law was enacted: there is a permanent appropriation that funds both the tax credits and the cost-sharing reduction subsidies that were at issue in this case.

The district court denied the States’ request for a preliminary injunction.  On the question of whether the Trump Administration’s decision to stop making the payments was lawful, the court concluded that at this “early stage,” the Administration appeared to have the better argument, but noted that the question is a “close and complicated” one.

Before the court issued any additional rulings, the plaintiff states asked the court to stay the proceedings or, in the alternative, dismiss the case without prejudice.  As the states explained, state regulators had developed an approach to mitigate the harm caused by the government’s failure to make these payments, and that approach had been generally successful. In response to that request, the district court dismissed the case without prejudice.

Case Timeline

  • October 21, 2017

    CAC files amicus brief

    N.D. Cal. Amicus Brief
  • October 25, 2017

    The district court denies the States’ request for a preliminary injunction

  • July 18, 2018

    The district court dismisses the case without prejudice

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