An insurance co-op is suing the federal government over the Trump Administration's decision to end cost-sharing reduction payments -- it's the first known lawsuit by an insurer over the payments that Republicans have called bailouts for the health insurance industry.
Maine Community Health Options filed the federal claims suit on Dec. 28 against the United States of America and said it is owed the funds by law.
President Donald Trump announced an end to the payments in October 2017.
Health Options wants damages in the amount of the CSR payments it said the government owes to the Maine co-op for 2017. The Congressional Budget Office has estimated about $7 billion in CSR payments for all ACA insurers in 2017, the lawsuit said.
Maine regulations did not allow Health Options to raise premium prices after the Trump Administration ended the CSRs, it said.
But insurers including Health Options were still required to pass along the savings that the cost sharing reduction payments would have subsidized to ACA beneficiaries, the lawsuit said.
"Insurers, in turn, are guaranteed by the ACA to be reimbursed by the government for the cost-sharing reductions they pay to their insureds," said the lawsuit submitted by Attorney Stephen McBrady of Washington, D.C. "The law is clear, and the government must abide by its statutory obligations. Plaintiff respectfully asks the court to compel the government to do so."
Community Health Options, the largest writer of individual health insurance in the state of Maine, is one of the few remaining Consumer Operated and Oriented Plans set up under the ACA to give consumers more options for buying coverage from a nonprofit insurer.
CSRs have already gone through a lengthy legal battle.
The payments were enacted under President Barack Obama. Republicans objected to the government paying for an expenditure they hadn't approved. They sued and won their case.
After last November's election, President Donald Trump became the sole arbiter of whether the payments continued.
In October 2017, an estimated 19 attorneys general filed a legal challenge against the president for ending the CSRs. Late in October, a federal judge in California denied the request by the 18 states and the District of Columbia for a temporary restraining order against the administration and its decision.
Most co-ops have closed due to financial losses.