The subsidies reimburse insurers for reducing deductibles, co-payments and other out-of-pocket costs for seven million low-income people who buy midlevel silver plans on the Affordable Care Act marketplace. Under the law, insurers will still have to provide the discounts, known as cost-sharing reductions, but may be unable to collect reimbursement from the government.
Mr. Trump ordered federal officials two weeks ago to stop making the monthly payments. Another federal district judge, in Washington, ruled in 2016 that the payments were unconstitutional because Congress had never appropriated money for them.
On Wednesday, Judge Chhabria concluded that “both sides have reasonable arguments’’ on the main legal question: Whether Congress appropriated money for the cost-sharing payments.
Two senior senators, Lamar Alexander of Tennessee, a Republican, and Patty Murray of Washington, a Democrat, announced last week that they had agreed on a bill to extend the cost-sharing payments through 2019 and make it easier for states to obtain waivers from requirements of the Affordable Care Act. After initially endorsing the deal, Mr. Trump backed off a day later, and the White House demanded changes as a condition of its support.
The Congressional Budget Office said Wednesday that the Alexander-Murray bill would produce a modest reduction in federal budget deficits, but would not substantially change the number of people with coverage.
The budget office estimated that the legislation would reduce deficits by a total of $3.8 billion over the next decade. With the deficit for the last fiscal year alone reaching $666 billion, that is a relatively small number, but supporters of the bill made the most of it.
“The Congressional Budget Office has found that our proposal benefits taxpayers, it benefits consumers — not insurance companies,” said Mr. Alexander, the chairman of the Senate health committee.
The proposal has broad support from Democratic senators and at least a dozen Republican senators. But conservative Republicans in the House and the Senate have denounced it as a bailout for insurers, and Mr. Trump has sent mixed signals about whether he supports it. Representative Dave Brat, Republican of Virginia, called the measure “a nonstarter.”
The budget office said that continuing the cost-sharing payments would not change its estimate of federal spending because it had already assumed that the government would pay the subsidies: $9 billion a year in 2018 and 2019, and a total of $99 billion from 2018 to 2027.
The Trump administration on Wednesday unveiled a new version of the HealthCare.gov website showing premiums and other details of health insurance plans that will be offered for sale in the open enrollment period that starts next week.
In many markets, consumers will have few choices and will see high sticker prices before taking account of financial assistance for which they may qualify. But by carefully shopping around, consumers will often be able to find bargains — a point highlighted in the case in California, where the state runs its own marketplace.
During Monday’s hearing, state officials told Judge Chhabria that cutting off the subsidy payments would cause immediate and irreparable harm to states and to consumers, increasing the likelihood that insurers would pull out of the marketplace.
But Judge Chhabria said California and most of the other state plaintiffs “saw the writing on the wall a long time ago — that the administration was going to terminate these payments to insurance companies to subsidize co-payments and deductibles.”
“California is doing a really good job of responding to the termination of these payments in a way that is not only avoiding harm for people, but actually benefiting people,” the judge added.
In his Wednesday ruling, Judge Chhabria wrote that low-income people who now have silver plans in some cases may be able to find gold plans with lower premiums and lower deductibles for 2018.
To offset the expected loss of cost-sharing subsidies, California added a surcharge to the price of midlevel silver plans sold on its Affordable Care Act marketplace. When premiums go up, consumers receive more financial assistance to help with premium costs, so in many cases they will be no worse off.
“Nearly four out of five consumers will see their premiums stay the same or decrease, since the amount of financial help they receive will also rise,” California’s insurance marketplace announced earlier this month. In addition, it said, three-fourths of consumers in the state who are eligible for assistance will be able to buy low-cost bronze health plans next year for less than $10 a month.
“The state of California is standing on the courthouse steps denouncing the president for taking away people’s health care,” Judge Chhabria said at Monday’s hearing, “when the truth is that California has come up with a solution to that issue that is going to result in better health care for a lot of people.”
Many other states have taken similar steps to minimize harm to consumers, the judge said. He was appointed in 2014 by President Barack Obama.
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