California Attorney General Xavier Becerra announced plans Friday to sue the Trump administration over its plans to stop federal funding for cost-sharing subsidies, which help low-income Americans afford health coverage under the Affordable Care Act. That means the administration will not be making its next payment on Wednesday, which could plunge the country's insurance markets into chaos.
Becerra and the other attorneys general said they are filing the federal lawsuit Friday, arguing that withholding cost-sharing subsidies is unlawful and violates a mandate in the law. Nationally, the subsidies represent about $7 billion a year; of that, $750 million goes to California.
Earlier this summer, the U.S. Court of Appeals for the District of Columbia Circuit ruled that a coalition of attorneys general - including Schneiderman and Becerra - can defend the payments.
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The legal challenge will say the subsidies are lawful, that the Trump administration action conflicts with federal law and that the president failed to follow proper procedure to change the subsidies that benefit 6 million people, including 700,000 Californians.
Meanwhile, in California, Attorney General Xavier Becerra said he similarly expected to file a suit to have the payments continue.
Despite widespread fear of instability, no insurers have announced plans to pull out of the market or file suits, Politico reports, partially because Trump has been threatening this move for months and they saw it coming.
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The subsidy payments help patients offset out-of-pocket medical costs, but President Trump deemed them unconstitutional bailouts for the insurance industry and announced he would be ending them immediately. "The federal government's going to pay more for this".
Additionally, New York Attorney General Eric Schneiderman said he anticipates proceeding with litigation on a case that's now been on hold.
"I don't know that the argument on the merits has a whole lot of juice", he said. The Justice Department said in court papers on Friday that the government would not make payments scheduled for October 18.
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Mary McCord of Georgetown Law's Institute for Constitutional Advocacy and Protection told the council the lawsuit doesn't seek monetary damages.