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COMPLAINT for DECLARATORY and INJUNCTIVE RELIEF Case 1:18-Cv-02364-DKC Document 1 Filed 08/02/18 Page 3 of 134

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COMPLAINT for DECLARATORY and INJUNCTIVE RELIEF Case 1:18-Cv-02364-DKC Document 1 Filed 08/02/18 Page 3 of 134 Case 1:18-cv-02364-DKC Document 1 Filed 08/02/18 Page 1 of 134 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND CITY OF COLUMBUS 90 W. Broad St. Columbus, OH 43215; MAYOR AND CITY COUNCIL OF BALTIMORE 100 N. Holliday St., Suite 101 Baltimore, MD 21202; CITY OF CINCINNATI City Hall, Room 214 801 Plum St. Cincinnati, OH 45202; CITY OF CHICAGO 121 N. Lasalle St., Room 600 Chicago, IL 60602 STEPHEN VONDRA c/o Democracy Forward Foundation 1333 H St. NW Washington, DC 20005; and BONNIE MORGAN c/o Democracy Forward Foundation 1333 H St. NW Washington, DC 20005; Plaintiffs, vs. Case No. 18-cv-2364 DONALD J. TRUMP, in his official capacity as President of the United States of America, 1600 Pennsylvania Ave. NW Washington, DC 20500; Case 1:18-cv-02364-DKC Document 1 Filed 08/02/18 Page 2 of 134 ALEX M. AZAR, II, in his official capacity as Secretary of the United States Department of Health and Human Services, 200 Independence Ave. SW Washington, DC 20201; UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES 200 Independence Ave. SW Washington, DC 20201; SEEMA VERMA, in her official capacity as Administrator of the Centers for Medicare and Medicaid Services, 7500 Security Blvd. Baltimore, MD 21244; and the CENTERS FOR MEDICARE AND MEDICAID SERVICES 7500 Security Blvd. Baltimore, MD 21244, Defendants. COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF Case 1:18-cv-02364-DKC Document 1 Filed 08/02/18 Page 3 of 134 TABLE OF CONTENTS NATURE OF THE ACTION ......................................................................................................... 4 JURISDICTION AND VENUE ..................................................................................................... 7 PARTIES ........................................................................................................................................ 7 FACTS ............................................................................................................................................ 9 I. The Individual Health Insurance Markets and the Affordable Care Act ................ 9 II. The Administration’s Intent to Repeal the ACA, With or Without Congress ...... 17 DEFENDANTS’ EXECUTIVE ACTIONS TO SABOTAGE THE AFFORDABLE CARE ACT ........................................................................................................ 28 I. The 2019 Rule ....................................................................................................... 29 Eliminating Protections that the ACA Guarantees ................................... 29 1. Permitting Exchanges to Strip Individuals of Eligibility for Tax Credits Without Providing Direct Notification ...................... 29 2. Outsourcing to States the Compliance Review of Insurance Plans to be Offered on Federal Exchanges ................................... 32 3. Reducing Oversight of Insurance Brokers Participating in Direct Enrollment .......................................................................... 35 Deterring Americans from Enrolling in Quality Health Insurance Plans .......................................................................................................... 37 1. Making It Harder to Compare Insurance Plans............................. 37 2. Undermining the Navigator Program ............................................ 39 3. Making Small Business Exchanges Less User-Friendly .............. 42 4. Imposing Unnecessary Income Verification Requirements ......... 43 Driving Up Costs ...................................................................................... 46 1. Exacerbating Risk Selection ......................................................... 46 2. Curtailing Review of Insurance Rate Increases ............................ 49 3. Reducing Rebates for Poor Insurer Performance .......................... 52 II. Additional Executive Actions Demonstrating Defendants’ Violation of Their Constitutional Duty to Faithfully Execute the ACA ................................... 55 Directing Agencies to Sabotage the Act ................................................... 55 Attempting to Destabilize the Exchanges ................................................. 57 1. Promoting Bare-Bones Plans to Try to Weaken ACA Exchanges ............................................................................ 61 2. Undermining the Individual Mandate ........................................... 65 Case 1:18-cv-02364-DKC Document 1 Filed 08/02/18 Page 4 of 134 3. Refusing to Grant State Waiver Requests that Would Further the ACA’s Goals .............................................................. 68 4. Attempting to Weaken Public Confidence in ACA Exchanges .... 70 Working to Decrease Enrollment .............................................................. 73 1. Shortening Open Enrollment ........................................................ 74 2. Cutting Funding for Advertising and Refusing to Publicize Open Enrollment ........................................................... 77 3. Cutting Funding for Navigators and Encouraging Them to Undermine the Act ........................................................................ 82 4. Refusing to Participate in Enrollment Events and Other Outreach .............................................................................. 88 Refusing to Defend the Act....................................................................... 89 DEFENDANTS’ UNLAWFUL ACTIONS ARE HARMING PLAINTIFFS ............................. 91 I. Defendants’ Unlawful Actions Are Causing Premiums to Rise and the Rate of the Uninsured to Increase ............................................................ 91 II. Defendants’ Unlawful Actions Harm the City Plaintiffs by Forcing Them to Spend More on Uncompensated Care ....................................... 96 Columbus, Ohio ...................................................................................... 102 Baltimore, Maryland ............................................................................... 106 Cincinnati, Ohio ...................................................................................... 111 Chicago, Illinois ...................................................................................... 114 III. Defendants’ Unlawful Actions Harm the Individual Plaintiffs by Making Insurance Coverage Harder and More Expensive to Procure ............................. 118 CLAIMS FOR RELIEF .............................................................................................................. 124 Count One (Violation of the Administrative Procedure Act) ......................................... 124 Count Two (Violation of the Take Care Clause) ............................................................ 126 PRAYER FOR RELIEF ............................................................................................................. 126 ii Case 1:18-cv-02364-DKC Document 1 Filed 08/02/18 Page 5 of 134 Plaintiffs the City of Columbus, Ohio, the Mayor and City Council of Baltimore, Maryland, the City of Cincinnati, Ohio, the City of Chicago, Illinois, Stephen Vondra, and Bonnie Morgan hereby sue Defendants Donald J. Trump, in his official capacity as President of the United States of America, Alex M. Azar, II, in his official capacity as Secretary of the United States Department of Health and Human Services, the United States Department of Health and Human Services, Seema Verma, in her official capacity as Administrator of the Centers for Medicare and Medicaid Services, and the Centers for Medicare and Medicaid Services, and allege as follows: 1. Having failed to persuade Congress to repeal the Affordable Care Act, President Trump and his Administration are waging a relentless campaign to sabotage and, ultimately, to nullify the law. President Trump has repeatedly admitted as much: because Congress rejected his demand to have “Obamacare repealed,” he has said, he decided “to go a different route” and “end[] Obamacare” through his own actions. To that end, President Trump and his Administration are deliberately trying to make the Act fail. They are discouraging Americans from enrolling in comprehensive plans that protect them against debilitating medical expenses. They are working to raise prices and reduce choices for Americans seeking insurance in the Act’s exchanges. And they are misappropriating funds Congress allocated to support the Act, instead using those funds to attack it. The Trump Administration’s strategy: to deceptively shift the blame from their own actions to the Act itself. Their objective: to pressure Congress to repeal the Act or, if that fails, to achieve de facto repeal through executive action alone. The Administration’s actions are unlawful. 2. The scope of this Complaint is testament to the breadth and persistence of the Trump Administration’s efforts to undermine the Affordable Care Act (“ACA”). As Plaintiffs— Case 1:18-cv-02364-DKC Document 1 Filed 08/02/18 Page 6 of 134 individuals and cities representing almost 4.5 million Americans—allege in detail below, the Administration has tried to prevent families from obtaining health insurance through the ACA’s exchanges by, for example: promoting insurance that does not comply with the ACA’s requirements, including insurance that does not cover preexisting conditions; slashing funding for outreach strategies that have been proven to encourage individuals, and healthy individuals in particular, to sign up for coverage; misusing federal funds for advertising campaigns aimed at smearing the ACA and its exchanges,
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