Obamacare is back in court.
This month, the U.S. District Court for the District of Columbia ruled that the Republican-controlled House of Representatives has standing to sue the Obama administration over how it spent federal money implementing the Affordable Care Act. The lawsuit, brought by House Speaker John Boehner (R-Ohio), challenges billions of dollars the administration gave to insurers to reduce out-of-pocket costs for almost 6 million low-income Americans.
Congress never officially appropriated the money for that purpose. But the Obama administration authorized the expenses anyway.
This lawsuit marks yet another major legal challenge to Obamacare since its passage in 2010. Two challenges have already been brought and decided before the U.S. Supreme Court. A victory for the House would help restore the separation of powers between the branches of the federal government — and rebuke an administration that views the Affordable Care Act as a license to do whatever it wants.
The case involves Obamacare’s cost-sharing reduction subsidies. The law provided them so that insurers could cover a large portion of the out-of-pocket costs, like deductibles and co-pays, for folks with incomes up to 250 percent of the federal poverty line.
For example, thanks to these subsidies, a low-income family of four could see its deductible for a mid-level Silver plan — the most popular plan on Obamacare’s exchanges — drop from $10,000 to $4,500.
The federal government is then supposed to reimburse the insurer for the difference. The Congressional Budget Office figures these subsidies will cost $136 billion over the next 10 years.
But Congress must appropriate this money each year. Last year, when Republican lawmakers refused to give President Obama the $4 billion he requested for these subsidies, he spent it anyway.
It’s no accident that the very first article of the Constitution grants Congress the power of the purse. The Founders sought to keep spending clearly contained to the legislative branch. If Congress doesn’t approve spending on something, the executive branch can’t just do it anyway.
This arrangement is an “integral part of our constitutional checks and balances,” noted Judge Rosemary Collyer in her ruling. She explained that the administration’s action harmed the House’s constitutional authority. That injury gave Boehner the right to sue.
The White House itself has sought congressional approval for these subsidies. In its 2014 budget request, the Department of Health and Human Services specifically asked for the money “to reimburse issuers who provided reduced cost-sharing.”
According to a Congressional Research Service analysis, “Unlike the refundable tax credits, these payments to health plans do not appear to be funded through a permanent appropriation.”
Translation — Congress must approve the money for cost-sharing reduction subsidies every year.
The administration’s response to Judge Collyer’s ruling is revealing. Rather than appeal the decision based on the merits, the White House is planning to appeal the question of standing to a higher court — a rare legal move known as “interlocutory appeal.”
In other words, the White House knows it could have a losing case on its hands. So the administration will try to get it dismissed on procedural grounds.
The stakes are high. For one thing, the lawsuit could allow the judiciary to signal that it will no longer allow the administration to flout the law repeatedly in order to advance its political interests.
The Galen Institute, a free-market healthcare think tank, has tabulated no less than 32 instances when President Obama made unilateral changes to the law. Among them: delaying the employer mandate, letting people keep plans that were cancelled because of Obamacare’s new rules, ignoring cuts to Medicare Advantage required by law, extending enrollment periods, and exempting unions from a “reinsurance” fee.
The current court challenge won’t directly address the administration’s previous extra-legal actions. But if the House prevails this time, it could be the beginning of the end for Obamacare.
Absent federal funding for these cost-sharing reduction subsidies, insurers would have to either eat these costs or force low-income folks to absorb immense out-of-pocket costs on their own.
The former course would require insurers to raise premiums for everyone else in the insurance pool in order to remain solvent. The latter, meanwhile, would render even heavily subsidized insurance worthless to those with low incomes, since they’d be exposed to five figures’ worth of deductibles and coinsurance that could amount to a substantial share of their annual wages.
The judiciary is about to consider Obamacare’s future yet again. For opponents of the law, hopefully this time is the charm.
Obamacare Is Back In Court
Sally C. Pipes
Obamacare is back in court.
This month, the U.S. District Court for the District of Columbia ruled that the Republican-controlled House of Representatives has standing to sue the Obama administration over how it spent federal money implementing the Affordable Care Act. The lawsuit, brought by House Speaker John Boehner (R-Ohio), challenges billions of dollars the administration gave to insurers to reduce out-of-pocket costs for almost 6 million low-income Americans.
Congress never officially appropriated the money for that purpose. But the Obama administration authorized the expenses anyway.
This lawsuit marks yet another major legal challenge to Obamacare since its passage in 2010. Two challenges have already been brought and decided before the U.S. Supreme Court. A victory for the House would help restore the separation of powers between the branches of the federal government — and rebuke an administration that views the Affordable Care Act as a license to do whatever it wants.
The case involves Obamacare’s cost-sharing reduction subsidies. The law provided them so that insurers could cover a large portion of the out-of-pocket costs, like deductibles and co-pays, for folks with incomes up to 250 percent of the federal poverty line.
For example, thanks to these subsidies, a low-income family of four could see its deductible for a mid-level Silver plan — the most popular plan on Obamacare’s exchanges — drop from $10,000 to $4,500.
The federal government is then supposed to reimburse the insurer for the difference. The Congressional Budget Office figures these subsidies will cost $136 billion over the next 10 years.
But Congress must appropriate this money each year. Last year, when Republican lawmakers refused to give President Obama the $4 billion he requested for these subsidies, he spent it anyway.
It’s no accident that the very first article of the Constitution grants Congress the power of the purse. The Founders sought to keep spending clearly contained to the legislative branch. If Congress doesn’t approve spending on something, the executive branch can’t just do it anyway.
This arrangement is an “integral part of our constitutional checks and balances,” noted Judge Rosemary Collyer in her ruling. She explained that the administration’s action harmed the House’s constitutional authority. That injury gave Boehner the right to sue.
The White House itself has sought congressional approval for these subsidies. In its 2014 budget request, the Department of Health and Human Services specifically asked for the money “to reimburse issuers who provided reduced cost-sharing.”
According to a Congressional Research Service analysis, “Unlike the refundable tax credits, these payments to health plans do not appear to be funded through a permanent appropriation.”
Translation — Congress must approve the money for cost-sharing reduction subsidies every year.
The administration’s response to Judge Collyer’s ruling is revealing. Rather than appeal the decision based on the merits, the White House is planning to appeal the question of standing to a higher court — a rare legal move known as “interlocutory appeal.”
In other words, the White House knows it could have a losing case on its hands. So the administration will try to get it dismissed on procedural grounds.
The stakes are high. For one thing, the lawsuit could allow the judiciary to signal that it will no longer allow the administration to flout the law repeatedly in order to advance its political interests.
The Galen Institute, a free-market healthcare think tank, has tabulated no less than 32 instances when President Obama made unilateral changes to the law. Among them: delaying the employer mandate, letting people keep plans that were cancelled because of Obamacare’s new rules, ignoring cuts to Medicare Advantage required by law, extending enrollment periods, and exempting unions from a “reinsurance” fee.
The current court challenge won’t directly address the administration’s previous extra-legal actions. But if the House prevails this time, it could be the beginning of the end for Obamacare.
Absent federal funding for these cost-sharing reduction subsidies, insurers would have to either eat these costs or force low-income folks to absorb immense out-of-pocket costs on their own.
The former course would require insurers to raise premiums for everyone else in the insurance pool in order to remain solvent. The latter, meanwhile, would render even heavily subsidized insurance worthless to those with low incomes, since they’d be exposed to five figures’ worth of deductibles and coinsurance that could amount to a substantial share of their annual wages.
The judiciary is about to consider Obamacare’s future yet again. For opponents of the law, hopefully this time is the charm.
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.