Lawsuit on President Obama overstepped his authority in funding the
Extra Benefits of Enhance Silver 94, 87 & 73 – Cost Sharing Reductions. (CSR)


What is Silver #Loading?

Why is it less $$ to buy a Silver Plan direct from an Insurance Company rather than Covered CA if you don’t qualify for subsidies?

Note that there is no extra charge to use an agent, either way.

Latest from CA Health Line 12.3.2015 ♦ 1.7.2016  Republican leaders in Congress said they will try to override the veto, [done 1.8.2016] on but it is likely that neither the House nor Senate has enough votes to successfully do so. GOP leaders said they plan to hold the override vote toward the end of this month (Kelly, USA Today, 1/6).


The budget reconciliation process allows legislation to advance through the Senate on a simple majority vote. The process can be used to target aspects of the ACA that address spending and revenue, meaning the technique could not uproot the entire law.

The House last month voted 240-189 to approve HR 3762, which aims to dismantle the ACA by repealing the law’s:

  • “Cadillac” and medical device taxes; and
  • Individual and employer mandates.  Learn More CA Health Line 11.20.2015

The Senate parliamentarian ruled that a budget reconciliation measure (HR 3762) that would dismantle the Affordable Care Act by repealing some of its major provisions can move forward,  CA Health Line 11.11.2015

The suit, authorized by House lawmakers in July 2014, contends that Congress never authorized the Department of Treasury’s payments to insurers for cost-sharing reductions to help low-income consumers pay for out-of-pocket costs such as coinsurance, copayments and deductibles.  While the case likely would not greatly affect the ACA, some consumers’ out-of-pocket spending could increase sharply if the cost-sharing subsidies are invalidated (California Healthline, 9/22).  “The House lawsuit undermines centuries of historical practice and the fundamental principles of our system of democratic government.” She added, “We are confident that the courts ultimately will dismiss this taxpayer-funded political stunt, which would make health care more expensive for millions of Americans” (The Hill, 10/19).   CA Health Line 10.20.2015

The House suit asks the court to declare that the president acted unconstitutionally in making payments to insurance companies under Section 1402 of the health care overhaul (PL 111-148, PL 111-152) and to stop the payments.

The dispute focuses on two sections of the health care law. The administration said it could make Section 1402 Offset Program payments from the same account as Section 1401 Refundable Tax Credit Program payments. House Republicans say the health care law doesn’t permit that.   Rollcall 9.21.2015

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A Federal Judge Ruled that President Obama overstepped his authority in funding the Extra Benefits of Enhance Silver 94, 87 & 73 – Cost Sharing Reductions. (CSR) (§1402 of PPACA).

There can be no more reimbursements to the Insurance Companies for Enhanced Silver’s extra benefits – see chart until Congress appropriates the $$$.

L.A.Care Health Plan, which was awarded nearly $6 million on Feb. 14 by Judge Thomas C. Wheeler of the Court of Federal Claims. Observing that the money was promised by the ACA and that Trump had no right to stiff the insurers, Wheeler wrote that “L.A. Care should not be left ‘holding the bag’ for taking our Government at its word.” LA Times *

The ruling is stayed, until the time for appeal, which seems likely – see video from the White House at right. On the other hand, with Donald Care coming, the appeal could be dropped on his inauguration 1.20.2017  * CA Healthline 8.2.2017 States can file lawsuits… * Actual Court Order * NPR 11.9.2016 * Health

Appeals court rules that Trump violated the law when the Feds stopped paying the subsidies, however insurers are not entitled to the full amount as they raised premiums to cover the loss.  Maine Community Health Options v. United States  Modern Health Care *

See also our webpage on Risk Corridors.

Learn More ==>

President Trump just announced that Cost Sharing Subsidies will end!!! Modern Health Care *

Covered CA will wait till 9.30.2017 to deciede on CSR Rates – Surcharge * 8.17.2017 Covered CA Press Release * CBO Report – Effect of Terminating CSR * Marketing Matters * Insure Me *

A federal appeals court has granted House Republicans a delay in their lawsuit seeking to halt certain federal payments to health plans under the Affordable Care Act. That delay buys time for the Trump administration to find a way to avoid throwing the individual insurance market into chaos. Modern Health Care 12.5.2016 * Actual Order * Delayed again – Now House v Price US News 2.21.2017 * Six changes Trump can still make to ACA NPR 3.29.2017 * LA Times Editorial 3.31.2017 * * Video on if there would be an appeal in the first place

Status Conference set for 5.22.2017 The House and the DOJ made the request in a joint motion Tuesday… The motion Tuesday grants the House and the DOJ until May 22 to file a status report with the court and establishes 90-day deadlines after that. US *

7.19.2017 Trump still threatens to stop Cost Sharing Reductions – Enhanced Silver * Politico 7.19.2017 August payments could stop this Thursday! Bloomberg 7.19.2017

Trump askes for 90 day extension. “Clearly by today’s action and their decision to make the next payment, the White House realizes that eliminating cost sharing reduction payments would cause chaos in the markets, and they would get the blame,” The 5.22.2017

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

8.16.2017 If President Donald Trump were to follow through on his threats to cut federal cost-sharing subsidies, health insurance premiums for silver plans would soar by an average of 20 percent next year and the federal deficit would rise by $194 billion over the next decade, the nonpartisan Congressional Budget Office said Tuesday 8.15.2016 CA Health Line * CBO Analysis

4.28.2017 Sacramento Bee CA Dept of Insurance (DOI) will allow Insurance Companies to file two sets of rates

One set would reflect the rates that insurance companies project if former President Barack Obama’s health care law remains in effect and is enforced.

The other set would be based on an assumption that President Donald Trump and the Republican Congress follow through on their pledges to repeal the Affordable Care Act, or that the Trump administration declines to enforce the law.

Jones’ office – DOI is expected to begin reviewing proposed 2018 health insurance rates next week. They’ll be released to the public on July 17.

The insurance commissioner can ask for changes to the proposed rates, or pressure companies to lower them by declaring them “unreasonable.”

The rates are finalized in October before open enrollment begins Nov. 1.

4.14.2017 Covered CA analysis CBO predicting rate increases….

Covered CA advises insurance companies to file contingent set of rates CA Health Line 6.2.2017

Some States extending deadlines for Insurance Companies to submit 2018 rates, amid the uncertainty. CA must file this week. Modern Health Care 4.20.2017

San Francisco Chronicale 4.11.2017 status in limbo

CA Insurance Dept. opposes loss of cost sharing reductions – enhanced silver 4.13.2017

Washington Post 5.12.2016 * 12.22.2016 Enhanced Silver could end immediately! * Commonweatlh Fund Analysis 12.21.2016

38 Page Ruling with our Annotations, Links & Bookmarks

Find it on Pacer.Gov – Requires Log In


1.20.2017 Trump Executive Order

Budget Reconcilation S. Con Res 3 Section 3001

The 7.7.2016 edition of the New York Times summarizes the 7.2016 Joint Congressional Source of Funding on ACA -CSR – Enhanced Silver report that the Obama administration knowingly spent billions for Enhanced Silver, without proper allocations. See also, The

On the one hand, if the extra cost for enhanced silver isn’t subsidized, then the premium would be higher and so would the subsidy.

Motion to Intervene – Stop the lawsuit

What is Silver Loading? 

Why is it less $$ to buy a Silver Plan direct from an Insurance Company rather than Covered CA if you don’t qualify for subsidies?

Note that there is no extra charge to use an agent, either way.

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 immediateInsurers 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.


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.



(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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38 page ruling –
no reimbursements for enhanced silver
this is why unsubsizized Silver is less premium outside of Covered CA
38 page ruling

5 comments on “Cost Sharing Reductions (CSR) Enhanced Silver – Lawsuit

  1. Nah,

    Steve you’re wrong about silver loading

    I’ve been a broker since 2012 and there’s never been any way you could get a plan for less premium outside of covered California

    if you think you’re right prove it

    because I’ve been an agent for six years and what you’re saying it’s just not true

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