The White House announced on Thursday night that the federal government would stop making the payments, known as cost-sharing reductions, or CSRs, which help insurers cover the cost of providing less expensive health insurance plan options.
New Mexico Health Connections is raising rates by an average of 50 percent next year, in part due to the expected loss of subsidy payments, which it relies on to reduce out-of-pocket costs for its poorest Obamacare customers.
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. "Massive subsidy payments to their pet insurance companies has stopped". "Just because he's in the White House doesn't mean he can make those decisions".
The complaint will seek a temporary restraining order, preliminary injunction and permanent injunction requiring the cost-sharing reduction payments be made.
Schneiderman said Trump based his decision on guidance from the Departments of Justice and Health and Human Services that there were no direct provisions in law calling for the cost reduction payments. Nationally, the subsidies represent about $7 billion a year; of that, $750 million goes to California. Becerra and other Democratic state attorneys general had intervened in that case, which is before the US Court of Appeals for the DC Circuit, to pick up the defense of the subsidies if the Trump administration chose to withdraw.
California Attorney General Xavier Becerra speaks in Los Angeles on September 12, 2017. It will be filed in U.S. District Court for the Northern District of California. Last week, Becerra's office sued the Trump administration over its rollback of the ACA's birth control mandate that allows more employers to opt out of the mandate by claiming religious or moral objections.
"Undermining the Affordable Care Act has been Donald Trump's and many Republicans' plans for a long time", Becerra said.