Some Obamacare Funding Declared Illegal by D.C. Federal Judge

Print Share on LinkedIn More

May 12, 2016; Bloomberg Politics

U.S. District Court Judge Rosemary Collyer ruled Thursday that the Obama administration lacked the authority to spend federal funds to subsidize healthcare insurance costs for the most common plans sold on the state and federal insurance exchanges. Judge Collier put her decision on hold while the U.S. Justice Department considers a likely appeal.

The U.S. House of Representatives sued in 2014, claiming that the subsidy funds could not be spent without first being appropriated by Congress. The Obama administration initially argued that the House of Representatives lacked legal standing to sue, but a 2015 court ruling upheld the House’s ability to sue. The administration advances several arguments in favor of spending without appropriation, including the implied authority involved in passage of the ACA in 2010 and the latitude given by courts to executive branch administration of laws (known to legal scholars as “Chevron deference”).

Should the suit ultimately be successful and Congress still refuse to appropriate subsidy funds, it is expected that premiums, deductibles, and co-pays for purchasers of so-called “silver” health insurance plans sold through the exchanges would need to increase in order to cover the estimated $175 million cost over ten years.

Collyer noted in her 38-page opinion:

[HHS Secretary Burwell and Treasury Secretary Lew] ignore their own actions and focus instead on congressional inaction […] It strains credulity to suggest that OMB or HHS submitted a multibillion-dollar budget request without analyzing the relevant statutes.

This is yet another chapter in the hyperpartisan wrangling over the Affordable Care Act, or Obamacare, which began before the law was passed and continues to this day.  Democratic Senator Daniel Patrick Moynihan’s health care reform advice to the Clinton administration in the 1990s is eerily prescient. As reported by Politico in 2013, Moynihan’s view was that “Sweeping, historic laws don’t pass barely. ‘They pass 70-to-30,’ he said, ‘or they fail.’”

Multiple court challenges and 50 attempts by House Republicans to repeal the law have been largely unsuccessful. However, the law’s intended implementation has been weakened by legislation design errors (such as making federal Medicaid funding to states dependent on Medicaid expansion, which was declared unconstitutional in 2012) and Congressional refusal to fund parts of the law such as the “risk corridors” that sought to stabilize insurance markets and hold insurance companies harmless as they sought to price policies sold under new terms to new markets.

It’s way too soon to know how this case will ultimately be decided, and it may well end up being one that will await the newest member of the U.S. Supreme Court after being confirmed by the U.S. Senate.—Michael Wyland