INTRODUCTION

In this litigation, (read full motion 179 pages) the House of Representatives attacks a critical feature of the Patient Protection and Affordable Care Act—landmark federal legislation that has made affordable health insurance coverage available to nearly 20 million Americans, many for the first time. If successful, the suit could—to use the President’s expression—“explode” the entire Act. Until recently, States and their residents could rely on the Executive Branch to respond to this attack. Now, events and statements, including from the President himself, have made clear that any such reliance is misplaced. The States of California, New York, Connecticut, Delaware, Hawaii, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, Pennsylvania, Vermont, and Washington, and the District of Columbia move to intervene to ensure an effective defense against the claims made in this case and to protect the interests of millions of state residents affected by this appeal.

The ACA was designed to create state-based markets presenting affordable insurance choices for consumers. A central feature of that design is federal cost-sharing reduction subsidies – Enhanced Silver backed by mandatory payment provisions, giving insurers and state regulators the stability they need to maintain functional markets. The district court’s ruling would destroy this design by eliminating the permanent appropriation Congress intended for cost-sharing reduction payments. Payments would cease immediately in the absence of a specific appropriation; and any future payments would be subject to the unpredictability of the appropriations process. That would directly subvert the ACA, injuring States, consumers, and the entire healthcare system.

The States thus have a vital interest in seeking reversal or vacatur of the district court’s decision. In California and New York alone, the ACA provides access to health coverage for 8.9 million people. The loss of funds and financial uncertainty threatened by this case would lead at least to higher health insurance costs for consumers, and more likely to many insurers abandoning the individual health insurance market. The number of uninsured Americans would go back up, hurting vulnerable individuals and directly burdening the States. The wrong decision could trigger the very system-wide “death spirals” that central ACA features, such as stable financing, were designed to avoid. See King v. Burwell, 135 S. Ct. 2480, 2493 (2015). At a minimum, the annual uncertainty created by the district court’s decision would make the States’ tasks in regulating and providing health insurance to their residents more complex, unpredictable, and expensive.

These concerns are concrete and immediate. Insurers are currently deciding whether to participate in ACA Exchanges in 2018. Some have already withdrawn because of uncertainty over funding for cost-sharing reduction payments, and others are threatening to follow suit. Meanwhile, the President has increasingly made clear that he views decisions about providing access to health insurance for millions of Americans—including the decision whether to continue defending this appeal—as little more than political bargaining chips. The States and their residents cannot continue to rely on the Executive Branch to represent them in this appeal.

BACKGROUND

Congress enacted the Affordable Care Act “to increase the number of Americans covered by health insurance and decrease the cost of health care.” Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2580 (2012). The ACA adopted a “series of interlocking reforms” to achieve these goals. King, 135 S. Ct. at 2485. It provides for the “creation of an ‘Exchange’ in each State—basically, a marketplace that allows people to compare and purchase insurance plans.”  Many States, including proposed intervenors, play an integral role in bringing plans to market through these Exchanges.

To make healthcare more affordable, the Act provides for billions of dollars in federal funding. Section 1401 provides tax credits that reduce monthly insurance premiums for eligible individuals. 26 U.S.C. § 36B. Section 1402 provides for federal payments to insurers to fund cost-sharing reductions (CSRs) for eligible consumers, which reduce out-of-pocket costs by lowering deductibles, co-payments, and similar expenses. 42 U.S.C. § 18071. The ACA requires insurers to cover CSR costs upfront when eligible consumers receive services at reduced cost. Id. § 18071(a)-(c). The Secretary of Health and Human Services must “make periodic and timely payments to the [insurer] equal to the value of the reductions.” Id. § 18071(c)(3)(A). CSR subsidies will total $9 billion in 2017, and are expected to rise to $16 billion by 2026. 3

Since the Exchanges began operating in January 2014, the Treasury has made CSR reimbursement funds available on the authority of the permanent appropriation provided by 31 U.S.C. § 1324. See Exec. Branch Opening Br. 9-10. In this suit, the House argues that the ACA’s permanent appropriation does not extend to CSR payments, making them unconstitutional without specific later appropriations. Id. at 11-12. The district court held that the House had standing to maintain this suit and enjoined the Executive Branch from making CSR payments without specific appropriations, but stayed its injunction pending this appeal. Id. at 13-16.

The Executive Branch appealed that decision under the prior Administration, filing its opening brief on October 24, 2016. On November 21, 2016, the House moved to hold briefing in abeyance in light of the “significant possibility of a meaningful change in policy” by the new Administration. ECF No. 1647228. This Court granted that motion on December 5, 2016. On February 21, 2017, the new Administration joined a motion to continue the abeyance period, which this Court granted on March 2, 2017.

ARGUMENT

I. THE STATES ARE ENTITLED TO INTERVENE TO DEFEND CONTINUED IMPLEMENTATION OF THE AFFORDABLE CARE ACT A party is entitled to intervene in an appeal as of right if:

(1) its motion is timely;

(2) it has a legally protected interest in the action;

(3) the outcome of the action threatens to impair that interest; and

(4) no existing party adequately represents that interest.  (read full motion 179 pages)

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CA and 13 other states file lawsuit (173 page motion to interveneto maintain Cost Sharing Subsidies – Enhanced Silver LA Times 5.19.2017 * Kaiser Health News *

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