U.S. District Court Judge Rosemary M. Collyer ruled today that the Obama administration has been improperly funding an Obamacare subsidy program, violating the Constitution’s separation of powers clause.
At issue was a subsidy program that helps poor people pay out-of-pocket medical expenses. The subsidy program that helps all eligible Americans pay their insurance premiums was not affected.
The case now moves to the Court of Appeals in Washington, D.C., where it faces an uncertain fate. The appellate courts have almost always backed the legality of Obamacare.
The ruling, if it stands, could be a significant financial setback for the millions of low-income Americans who benefit from the cost-sharing subsidies, which help people pay for out-of-pocket costs like co-pays at the doctor’s office. But it would not be a fatal blow to the future of the president’s signature domestic policy achievement, but it could push insurance costs higher.
Republicans have praised the challenge as a needed check on the White House’s authority.
“This decision is a critical step in protecting Congress’s power of the purse from an Administration that has repeatedly ignored a fundamental principle of our Republic: the separation of powers,” said House Ways and Means Committee Chairman Kevin Brady.
The Obama administration is expected to immediately appeal the decision to the Court of Appeals for the District of Columbia.
“This is not the first time that we’ve seen opponents of the Affordable Care Act go through the motions to try to win this political fight in the court system,” said White House press secretary Josh Earnest.
The health care law was designed to reimburse insurers for providing the cost-sharing subsidies to low-income customers who purchased exchange coverage. A second Obamacare subsidy program helping customers pay monthly premiums wasn’t target in the House lawsuit.
The House argues that the cost-sharing program was authorized but never appropriated. The House says that there is proof that the White House knew the cost-sharing subsidies weren’t funded and worked around the legislation to implement them.
The White House asked Congress to fund the program in its fiscal year 2014 budget request, which was denied. It then unilaterally funded the program through the refundable tax credit account anyway, the House lawyers argued in court.
When he filed the House v. Burwell lawsuit two years ago, former House Speaker John Boehner framed it as a check on the executive branch’s ability to change legislation once it was approved by Congress.
But the Justice Department says the subsidies were funded appropriately. Its lawyers told the court that the program was funded in the same pot of money as the law’s refundable tax credits to help people pay for premiums.
What makes these subsidies so important is that, without them, insurance companies would be forced to raise their premiums by a substantial margin — up to 30% for some plans. Needless to say, such an increase would send Obamacare into a death spiral.
An unusual aspect of this suit is that the administration challenged the standing of the House to sue the executive branch. Ordinarily, this is a slam dunk, with almost all cases being thrown out because the courts hate to intervene in what they see as a political spat between the branches.
But Collyer allowed the case to go forward, probably because of the clear-cut Constitutional issue involved.