On October 25, 2017, District Court Judge Vince Chhabria of the United States District Court for the Northern District of California denied a request by California, along with 17 other states and the District of Columbia, for a preliminary injunction requiring the Trump Administration to make cost-sharing reduction payments to insurance companies. This follows a 2016 decision by the United States District Court for the District of Columbia that held that the government could not make such payments absent an appropriation made by law.
Background. Section 1402 of the Patient Protection and Affordable Care Act, Pub. L. No. 111-148, 124 Stat. 119 (2010) (“ACA”) requires insurance companies to subsidize the cost of co-payments and deductibles for people with lower incomes (which deductibles and co-payments are referred to as “cost-sharing”) by reducing those costs to such persons (a “cost-sharing reduction”). Section 1402 of the ACA requires the government to reimburse insurance companies for these cost-sharing reductions by means of cost-sharing reduction payments (“CSR payments”). Notwithstanding the fact that the ACA requires the government to make the CSR payments, it does not explicitly address whether Congress must annually appropriate the funds to do so or whether there is an implicit continuing appropriation for such payments. Congress has not made an annual appropriation for CSR payments in fiscal year budgets 2014 or thereafter. The Obama Administration took the position that the ACA implicitly contains continuing appropriations for CSR payments and made them without an annual appropriation. The U.S. House of Representatives (“House”), on the other hand, and the Trump Administration take the position that the U.S. Constitution requires that there must be an annual Congressional appropriation to make the CSR payments.
In 2014, the House...
