Brief Summary: Several cities across the United States filed a class action lawsuit against President Trump, the U.S. Department of Health and Human Services (HHS), and the Centers for Medicare and Medicaid Services (CMS), alleging that the administration is intentionally circumventing Congress and sabotaging the Patient Protection and Affordable Care Act (ACA) through executive actions.
Overview: On August 2, 2018, the plaintiffs filed their initial complaint with the United States District Court for the District of Maryland. The plaintiffs argue that the Trump Administration’s actions are pushing insurers out of the ACA exchanges, raising premiums, and increasing the number of uninsured and underinsured Americans. Among others, these actions include:
- Directing federal agencies to sabotage the ACA using Executive Order 13,765;
- Attempting to destabilize the insurance exchanges;
- Promoting non-ACA-complaint health plans; and
- Undermining the individual mandate.
Because of these actions, the plaintiff cities claim that they must spend more money on uncompensated care for their residents, which is contrary to the objectives of the ACA. Additionally, the plaintiffs argue that the Trump Administration’s actions violate Article II, Section 3 of the U.S. Constitution, which requires the executive branch to “take care that the laws be faithfully executed.” Finally, the plaintiffs argue that the Trump Administration has violated the Administrative Procedure Act because of the Notice of Benefit and Payment Parameters for 2019 rule that CMS promulgated. The plaintiffs assert that this rule contains provisions that are contrary to the text of the ACA and has the effect of increasing the cost of coverage and creating enrollment barriers. The provisions of the 2019 Rule at issue include:
- Permitting exchanges to strip individuals of eligibility for tax credits without providing direct notification;
- Outsourcing to states the compliance review of insurance plans to be offered on federal exchanges;
- Reducing oversight of insurance brokers participating in direct enrollment;
- Making it harder to compare insurance plans;
- Undermining the navigator program;
- Making small business exchanges less user-friendly;
- Imposing unnecessary income verification requirements;
- Exacerbating risk selection;
- Curtailing review of insurance rate increases; and
- Reducing rebates for poor insurer performance.
On January 25, 2019, the plaintiffs amended their complaint to add Philadelphia to the suit and to detail the Trump Administration’s most recent attempts to undermine the ACA. These actions include arbitrarily raising health insurance premiums caused by the proposed Notice of Benefit and Payment Parameters for 2020, which CMS issued on January 17, 2019. The plaintiffs allege premiums will be arbitrarily increased because of proposed changes made to the Premium Adjustment Percentage and the reduction in enrollment assistance that can make it more challenging for consumers to enroll in a health plan.
Court Updates:U.S. District Court for the District of Maryland Opinion
On April 10, the court issued a partial ruling, dismissing the plaintiffs’ claims that the Trump administration violated the Constitution’s Take Care Clause by failing to fulfill its duty to implement the ACA. The court ruled that it does not have jurisdiction to instruct the president how to faithfully execute the ACA and that “judicial intervention here would impinge on the discretion that Congress has afforded to the President.” However, the judge allowed the claims under the Administrative Protection Act (i.e., that the Trump administration’s ACA policies are “arbitrary and capricious” and “contrary to law”) to move forward.
Current Status:The Court is currently waiting for CMS to file administrative documents with the court to show the agency’s decision-making process for the challenged policies.
Impact: The court could enjoin the Trump Administration from taking additional executive actions to undermine the ACA. Alternatively, the court could find that the Trump Administration’s actions are lawful, which could embolden the Administration to take more severe actions to undermine the ACA in the future.