Garrett Fenton was quoted regarding appropriation of federal funds for cost-sharing reductions under the Affordable Care Act (ACA) after a recent district court decision found federal reimbursements to insurers that offered cost-sharing reductions to low-income enrollees to be unconstitutional. The court determined that section 1402 of the ACA could not be funded under section 1401, finding that an appropriation cannot be inferred but must be expressly stated. "The fact that the statute requires health insurers to reduce cost-sharing for certain lower-income individuals, and provides that the insurers will be reimbursed for doing so, does not amount to a formal appropriation," Fenton said. "In addition, although the premium tax credits under Section 1401 and the cost-sharing reductions under Section 1402 are related -- insofar as a person who is ineligible for tax credits will necessarily be ineligible for cost-sharing reductions -- the court did not find the two regimes to be so intertwined as to allow the appropriation for tax credits to apply for cost-sharing reductions as well."
The decision could persuade insurers to stop offering qualified health plans on the exchange. "The cost-sharing reductions program is a very important piece of the overall ACA framework, and the decision seemingly could have a major impact on the health insurance market as a whole," Fenton added.