About 11,000 people in Minnesota are being helped this year by "cost-sharing reduction" payments that the Trump administration late Thursday said would no longer be sent from the federal government to health insurers.

While that's a relatively small number of beneficiaries compared with most states, it's large enough that Minnesota Attorney General Lori Swanson said Friday she will seek an injunction as part of a lawsuit that would prevent the federal government from withholding the payments, which are supposed to be made next week.

"Cutting off payments that help lower the cost of health care only makes it worse for thousands of Minnesotans," Swanson said in a statement.

There could be a larger impact on MinnesotaCare, a state health insurance program for lower-income residents that derives a large chunk of funding from a formula that's based on the cost-sharing reduction (CSR) payments. But state officials said Friday they were still studying the impact, while insurers said they would continue selling individual market coverage without changing rates.

"The Trump Administration's decision to abruptly end these cost-saving federal subsidies is very concerning," the state commissioners for Commerce and Human Services and the MNsure chief executive said in a joint statement Friday. "We are still working to analyze the future impacts this decision will have on the Minnesotans who rely on MinnesotaCare and individual health insurance policies."

Under the Affordable Care Act (ACA), the federal government makes cost-sharing reduction payments directly to health plans, which pass along the value to consumers in the form of lower deductibles and out-of-pocket spending requirements.

The payments benefit lower-income people who buy individual policies, a group comprised primarily of people under age 65 who are self-employed or don't get coverage from an employer.

Most in Minnesota with incomes that would make them eligible for the subsidies don't buy individual policies but instead enroll in MinnesotaCare, a state health insurance program that covers 91,000 people who are sometimes described as the "working poor."

The ACA lets the state tap the value of forgone CSR payments to fund MinnesotaCare, to the tune of more than $100 million per year, according to a legal filing earlier this year from Swanson in a different lawsuit.

Through the first six months of the year, CSR payments to Minnesota health plans were worth a combined $1.67 million, a state official said earlier, adding that the payments in June were helping 11,661 people with individual coverage.

In the joint statement Friday, state officials said the Trump administration's action "will almost certainly create higher health insurance costs in the years ahead."

But they added it will not immediately affect health insurance premiums for consumers; although payments to health plans would end, insurers will continue to provide the benefit to consumers.

In addition, the action doesn't stop the federal government from providing premium tax credits that help a much larger group of Minnesotans afford their coverage purchased on the state's MNsure health insurance exchange.

For 2018, the state Commerce Department approved individual market rates in which health plans assumed the CSR payments were going away.

On Friday, an HHS spokesman told the Star Tribune via e-mail that the administration's decision would affect funding for what the ACA calls a Basic Health Program (BHP), but details weren't available. The MinnesotaCare program is one of just two BHPs in the country.

Eliminating the payments is the second Trump administration decision that could affect federal funding for MinnesotaCare. Last month, federal health regulators approved a state reinsurance proposal that lowered premiums on the individual market, but at the same time said Minnesota would lose $369 million in MinnesotaCare funding over two years.

State officials and state legislators from both parties said that the decision was a surprise reversal by federal regulators, who had said the funding would not be affected. A final decision on that issue could come by the end of this month.

Insurers in some parts of the country have warned that eliminating the CSR payments could throw insurance markets into chaos, prompting big rate increases as carriers adjust to the change. Insurers in Minnesota, however, said Friday the announcement won't stop them from selling individual market coverage next year.

"Our premiums for 2018 anticipated this action and were increased previously to account for it," Geoff Bartsh, a vice president with Minnetonka-based Medica, said in a statement. "Federal subsidies are not going away and, as a result of this action, will go up resulting in lower-cost options for many consumers."

Most insurers and regulators figured the administration would suspend the payments and have done what they can to plan for it, said Jim Schowalter, chief executive of the Minnesota Council of Health Plans, a trade group for health insurers.

"Here, it means legislators don't really know how much money in the future will be available to fund MinnesotaCare," he said. "And it means another broken federal promise to people who buy their own insurance."

Christopher Snowbeck • 612-673-4744

Glenn Howatt• 612-673-7192