House v. Price Case Threatens Health Care for Millions

Update (5/22/2017, 4:30pm): The Trump administration today asked the U.S. Court of Appeals in DC for a 90-day hold before the administration announces whether it will continue a cost-sharing program that pays for out-of-pocket expenses for millions of families.  This delay comes at the worst possible time as insurers file for 2018 marketplace rates, and continues to create uncertainty regarding the future of the Affordable Care Act (ACA). Insurers continue to warn that this uncertainty will force them to drastically raise premiums or leave the markets altogether.​ Read our statement on this development.

Update (5/22/2017, 10:30am): Today, the Trump Administration will update the U.S. Court of Appeals in D.C. regarding its position in House v. Price. Will it drop the case or continue to defend the federal government funding subsidies? Check back here for updates throughout the day.

Update (5/19/2017): President Trump indicated he wants to stop funding the subsidies that reduce the amount consumers must pay out of their own pockets on health care. If the Trump Administration does not agree to continue funding this program permanently, premiums will rise, and insurers may pull out of the market leaving consumers without help paying for health care.​

On top of Republican plans to repeal the federal health reform law, there’s another threat to the Affordable Care Act looming in the courts. A legal case, House v. Price ​(formerly House v. Burwell), now before the Circuit Court of Appeals for the District of Columbia, challenges part of the ACA that lowers deductibles and other out-of-pocket health care costs for people with modest incomes.

Lawsuit filed by House Republicans seeks an end to subsidies that lower consumers’ out-of-pocket health care costs

This suit was filed by Republican members of the House of Representatives in 2014. It charges that the Obama administration lacked authority to pay for cost-sharing reductions (also called cost-sharing subsidies) – even though these cost sharing reductions are an explicit part of the law.

Cost-sharing reductions are one way the ACA protects consumers from high health care costs by reducing health plan deductibles and other out-of-pocket costs for people with low to middle incomes​ who buy coverage on the marketplace. Why cost-sharing reductions are important to helping people afford health care.

Last year, the Obama administration was defending the case. If Congress does not resolve the issue and the Trump administration decides not to continue defending it, the health care system could immediately be thrown into disarray, spiking premiums, and making care unaffordable to millions of Americans.

Congress could solve this problem easily by making it crystal clear that funding will continue for cost-sharing reductions as an entitlement program, meaning it is treated as mandatory spending that is ongoing and doesn’t require annual appropriations.

What is House v. Price about?

House v. Price is a dispute about whether or not the federal government is allowed to spend money for the cost-sharing reductions. The House argues that the administration should not be reimbursing insurers for these cost-sharing reductions without a formal and explicit appropriation; the Obama administration argued strongly that the law provides for that spending, because it is tied to the permanent appropriation for premium tax credits.

How does the Affordable Care Act lower consumers’ out-of-pocket health care costs?

Right now, people who buy marketplace plans and have incomes below 250 percent of the poverty line ($29,700 for an individual; $50,400 for a family of three) get help that reduces the most they will have to pay for covered medical care in a year if they get really sick (that is, it reduces their out-of-pocket maximum cost sharing). About 6.4 million people get these cost-sharing reductions, called “extra savings on out-of-pocket costs in silver plans.”

For working poor families, cost-sharing reductions can also significantly reduce deductibles (the amount that they pay up front for care before their health plan kicks in). Such help is one reason that more people are able to afford health care than were seven years ago. 

For example, David, who earns about $20,000 in a year, could only afford high-deductible, catastrophic coverage before the Affordable Care Act. Now, thanks to premium assistance and cost sharing reductions, he is able to afford a plan with a deductible of $500; his out-of-pocket expenses for care are capped at $700 per year. With this help, he is able to get regular treatment for a gastrointestinal disorder and heart condition, treatment he would not have been able to afford before. Families USA and other consumer organizations, in an amicus brief, have explained that without the extra help of cost-sharing reductions, many people would not be able to afford their insurance and medical costs.

The case is now before the D.C. Circuit Court of Appeals, which has put the case on hold with regular status updates. The next report is due to the court on May 22. 

A decision not to pay for cost-sharing reductions would throw the nation’s health care system into disarray, threatening care for millions.

• The law requires marketplace insurers to reduce costs for low- to middle-income consumers, so would they do that without reimbursement? No. Insurers point out that if they had to depend on uncertain annual congressional appropriations for cost-sharing reductions, they could not feasibly participate in the marketplaces.
• If insurers stayed in the marketplace, they would likely have to raise premiums to recoup the cost of providing cost-sharing reductions, but this is probably not feasible: Many consumers who are above the income limits for premium assistance would drop coverage rather than pay higher premiums, especially if they felt healthy enough to risk going uninsured. This would leave marketplace insurers with fewer enrollees and a higher proportion of enrollees with high medical claims.
• To avoid this scenario, many insurers would likely leave the marketplace instead, terminating plans for the millions of consumers who buy marketplace coverage and leaving some areas of the country with no plans that provide premium assistance or cost-sharing reductions.
• A mid-year decision not to reimburse for cost-sharing reductions would wreak even further havoc. As insurers point out, laws and regulations prohibit them from raising premiums mid-year. A sudden loss of funds to insurers to pay for health care could destabilize the entire individual health insurance market.

Besides leaving consumers without health insurance and throwing insurers into crisis, this sort of chaos would affect health providers. For instance, under long-standing laws, hospitals must provide at least life-saving emergency care to patients before asking about payment. Hospitals do not have the resources to suddenly care for millions more uninsured consumers, as they explained in their brief. 

What can consumers and their advocates do?

Besides the threats in House v. Price, the future of cost-sharing reductions is also jeopardized by repeal and replace proposals. Proposals advanced so far don’t include robust programs to lower deductibles and other cost-sharing for consumers with low to middle incomes. You can tell your representative in Congress that the financial help low- and middle-income consumers get to reduce their deductibles, other cost-sharing, and premiums is essential. You can send a clear message to the Trump administration that health care and coverage must continue and must be affordable, including for low and middle income consumers. You can share your stories about why premium credits and cost-sharing reductions, called “extra savings” on HealthCare.gov, are important.