A federal lawsuit filed in Manhattan Friday by the states of New York and Minnesota alleges that the Trump administration is wrongfully withholding more than $1 billion in health care funding, jeopardizing the health care of roughly 800,000 people.

The complaint filed in the U.S. District Court for the Southern District of New York comes in response to the Trump administration's decision to withhold payments from the Basic Health Program, a provision of the Obama-era Affordable Care Act that provides subsidized insurance coverage to low-income individuals who do not qualify for Medicaid. The Basic Health Program is contingent on congressional funding.

The civil complaint asks for declaratory and injunctive relief and names the U.S. Department of Health & Human Services and Acting Secretary Eric Hargan as defendants.The U.S. Senate approved Alex Azar for secretary of HHS on Jan. 24.

HHS declined to comment on the lawsuit.

President Donald Trump in October ended the cost-sharing reduction payments to the Basic Health Program, known as the Essential Plan in New York and MinnesotaCare in Minnesota, arguing that the payments were illegal because Congress never appropriated the funding. The U.S. Department of Health & Human Services then informed New York and Minnesota—the only two states to have a Basic Health Program—that they would no longer be receiving cost-share reduction payments. The cost-sharing payment covers roughly $1 billion for New York's Essential Plan per year and $128 million for MinnesotaCare.

The lawsuit filed by New York Attorney General Eric Schneiderman and Minnesota Attorney General Lori Swanson claims that the logic behind ending cost-sharing reduction payments is “meritless” and shouldn't apply to Basic Health Programs, because the subsidized insurance program was written into the ACA.

“Even if Congress did not appropriate money to make CSR payments to insurers on exchanges, HHS would still be obligated to make full BHP payments—including any 'CSR component'—under the distinct statutory framework governing the BHP,” the lawsuit claims.

While New York and Minnesota submitted proposals to HHS that would restore the funding, the agency has “failed to respond to those well-supported proposals and instead continued its unlawful and unjustified determination to pay only a portion of the full funding owed,” a press release from Schneiderman's office claims.

Schneiderman's team on the lawsuit is composed of Elizabeth Chesler, assistant attorney general of the health care bureau; Lisa Landau, bureau chief of the health care bureau; Steven Wu, deputy solicitor general; Matthew W. Grieco, assistant solicitor general; Howard Master, senior enforcement counsel; and Eric Haren, special counsel and senior adviser.

Scott H. Ikeda (pro hac vice application forthcoming) assistant attorney general and Brandon Boese (pro hac vice application forthcoming), assistant attorney general are representing the Minnesota Attorney General's Office in the case.