California Seeks Restraining Order to Keep Obamacare Subsidies to Insurance Companies

Xavier Becerra

California Attorney General Xavier Becerra asked the U.S. Court of Appeals Court in Washington, DC, on Wednesday to grant an emergency restraining order to force the Trump administration to pay $600 million a month in Obamacare insurance subsidies that have previously been declared illegal.

Breitbart News reported that almost immediately after President Donald Trump ordered the discontinuance of unconstitutional “cost-sharing reduction” (CSR) payments that go directly to insurance companies, Covered California, the state’s Obamacare exchange, announced that insurance premiums for its second cheapest plan would spike by almost 25 percent next year.

Congress was unable to replace and repeal Obamacare after Republican Senator John McCain (R-AZ) and others scuttled the Congressional fix, but congressional leaders noted within days of that failure that there was a bipartisan deal forming to keep insurance companies subsidized.

Although President Trump initially voiced support for the move, Congress would have to use its discretionary spending capability to preserve a key part of an entitlement that seems to become more expensive by the day. Trump killing CSRs would free up $10 billion for other priorities.

California’s state health insurance agency reacted by first announcing a surcharge of 12.4 percent on top of the 12.9 percent increase already authorized for Covered California’s most popular “silver plan.” But that now seems to have been just an average surcharge: some regions of the state will see a 27 percent additional spike.

The Congressional Budget Office estimated the loss of cost-sharing subsidies would increase premium costs by 20 percent. The 11 insurers that signed up to offer Covered California healthcare policies in 2018 could apparently suffer about a 7.6 percent loss.

Although originally part of Obamacare’s design, Congress never funded the cost-sharing subsidy payments and won a lawsuit last year determining that President Obama’s authorization of the annual payments was unconstitutional. But the court, on request form the Obama administration, allowed the payments to continue while the case was on appeal. The Trump administration continued that appeal, pending congressional legislation on Obamacare.

The U.S. Court of Appeals Court on August 1 allowed 17 states, led by California, to join the case to argue for reversing the lower court decision.

Obamacare was sold to voters on a promise to slash healthcare insurance premiums by up to $2,500 per family. But mandatory rules and benefits for all health insurance policies have caused premiums to spike by 68 percent between 2010 and 2015, according to the National Association of State Legislatures.

As a result, the average cost of healthcare for a family of four in the United States had risen to $17,322 in 2017, the world’s highest average cost. But in even more highly-regulated California, the average family healthcare premium is an even worse $18,045.



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