SAN FRANCISCO -- A federal judge in San Francisco suggested Monday there was no need for a court to step in and block President Donald Trump's order that cut off health care subsidies that have been a center of political debate.
The subsidies, which reimburse insurers for reducing out-of-pocket costs for lower-income Americans, are key to keeping health insurance markets stable and preventing premiums from rising sharply, insurance officials and state regulators say.
California Attorney General Xavier Becerra, joined by Democratic counterparts from 17 other states and the District of Columbia, asked the court to put Trump's order on hold. They argue Trump's action would spark "chaos and uncertainty," raise the cost of health insurance and the number of uninsured Americans and saddle states and local governments with higher expenses.
But U.S. District Judge Vince Chhabria, an Obama appointee, expressed considerable skepticism during a hearing Monday. He noted that 40 to 45 states, including California, took steps to prepare for Trump's action in advance, and as a result, most health care consumers will face stable or even lower premiums.
"It seems like California is doing a really good job of responding," he said during the hearing.
"The state of California is standing on the courthouse steps denouncing the president for taking away people's health care when the truth is California has come up with a solution to that issue that is going to result in better health care for people," he added later.
Chhabria, who said he would issue a final ruling Tuesday, suggested that an injunction would just create more uncertainty.
His comments seemed to lean toward the government's position that the states had not proven any emergency that would justify a court order. In written arguments last week, administration lawyers said in response to the states' suit that "the harms that they allege are speculative; at best they will occur months or years from now, not next week."
Indeed, Congress could resolve the issue. A bipartisan deal reached this month by two senior U.S. senators would reinstate the payments for the next two years. Senate Majority Leader Mitch McConnell, R-Ky., said Sunday he would bring the legislation to the floor if Trump makes clear he would sign it. Trump has taken conflicting positions.
Many conservative Republicans have opposed the legislation, saying that Congress should take no action to fix Obamacare, which they want to repeal.
Other Republicans have supported the compromise move, in part because the people most likely to be hurt by cutting off the insurance payments are a largely Republican constituency -- middle- and upper-income working people who do not get insurance coverage from an employer.
The money at issue, known as cost-sharing reduction payments, has been one of the more controversial elements of the Affordable Care Act, denounced by Trump and other Republicans as a "bailout" for insurance companies.
In fact, almost the opposite is true -- the federal government will pay more to insurers without the cost-sharing payments than with them because of the way the health care law works, according to the nonpartisan Congressional Budget Office. Eliminating the payments would cost the government roughly an extra $20 billion a year, the budget office estimated in August.
Under the health care law, insurers are required to provide low-income customers with health plans that have reduced deductibles and co-pays. To reimburse insurers for the cost of doing that, the law directs the government to make monthly payments "equal to the value of the reductions."
Without the payments, insurers would still be required to offer health plans with low deductibles and co-payments. To make up for the cost, they have generally raised premiums for the so-called silver plans offered on the Obamacare marketplaces.
Insurance officials around the country have estimated that on average, premiums are increasing by about 20 percent, but the amount varies widely from one part of the country to another.
Most health care consumers who buy insurance on the individual market will be protected from those increases because they receive federal help to pay for insurance premiums. But those whose incomes are too high to get that assistance will feel the impact. An attorney from Becerra's office said 2.1 million people across the country would be hit.
While the premium increases may solve the immediate problem, ending the payments eventually could cause some insurers to quit the market altogether, officials in several states, patient advocates and insurance industry executives have said.
The payments have been the subject of a separate court battle over their legal status. In 2014, after the health care law first took full effect, the Republican-majority Congress did not appropriate money to make the payments.
The Obama administration decided that the language of the law constituted a so-called permanent appropriation, which allowed it to make the payments without further congressional action, similar to the way many other government benefit programs are funded.
Republican lawmakers went to court and won a ruling last year from a district judge in Washington that the payments were illegal. That ruling has since been put on hold pending further action in the case before the court of appeals. That case has been on hold since Trump's election.
The current lawsuit was filed by attorneys general in California, Connecticut, Delaware, the District of Columbia, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and the state of Washington.
(Dolan reported from San Francisco and Lauter from Washington, D.C.)
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