The US District Court for the Northern District of California [official website] on Wednesday denied [order, PDF] a motion for preliminary injunction to require the Trump administration to continue to pay insurance subsidies necessary for the Affordable Care Act (ACA) [text, PDF].

The legal problem in this case, as summarized by judge Vince Chhabria is as follows:

The Affordable Care Act requires health insurance companies to subsidize the cost of co-payments and deductibles for lower-income people. In turn, the Act requires the federal government to make advance payments to the companies to cover the cost of this subsidy. … while the Act requires the insurance companies to be paid, it’s unclear whether the Act actually appropriated money for these payments. If Congress doesn’t appropriate money for a program, the Constitution prohibits the executive branch from spending money on that program – even if Congress previously enacted a statute requiring the expenditure.”

The Obama administration drew funds from the federal treasury every month to pay the insurance companies, taking the position that the ACA did in fact appropriate money for such programs. However, the Trump administration disagreed, and terminated the payments [JURIST report], leading to this current suit [materials] and motion. The motion, filed by California, 17 other states and DC essentially requires the Trump Administration to continue making the payments while the suit is still pending.

Chhabria denied the motion stating that the case is at an “early stage” and that the Trump administration has the “stronger legal argument.” Chhabria added:

the emergency relief sought by the states would be counterproductive. State regulators have been working for months to prepare for the termination of these payments. And although you wouldn’t know it from reading the states’ papers in this lawsuit, the truth is that most state regulators have devised responses that give millions of lower-income people better health coverage options than they would otherwise have had. This is true in almost all the states joining this lawsuit. … If the states are so concerned that people will be scared away from the exchanges by the thought of higher premiums, perhaps they should stop yelling about higher premiums. With open enrollment just days away, perhaps the states should focus instead on communicating the message that they have devised a response to the CSR payment termination

Chhabria has ordered a telephonic case management conference for November 21, 2017 at 2:30 p.m. to set a schedule for the full adjudication of the case.

California Attorney General Xavier Becerra [official website] pledged to continue fighting fiercely [LA Times report] for the resumption of the federal subsidies as the suit moves forward.