Brandon Davis, PoliticKING
A federal judge's decision May 12, says that the Obama administration unconstitutionally spent money to pay for part of the Affordable Care Act. This latest ruling regarding ACA promptly delivered a blow to the share prices of hospitals and health insurers, but may not disrupt health plans or beneficiaries right away.
U.S. District Judge Rosemary Collyer knocked down a portion of President Obama’s signature Affordable Care Act, ruling that Obama surpassed his authority in funding a provision that sent billions of dollars in subsidies to health insurers. In the 38-page verdict, Judge Collyer sided with the U.S. House of Representatives, who delivered the lawsuit challenging more than $175 billion of spending (after a party-line vote by House Republicans in July 2014).
The House GOP argued the administration’s decision to subsidize deductibles, co-pays and other “cost-sharing” measures was unconstitutional because Congress rejected an administration request for funding in 2014. Obama officials said they withdrew the request and spent the money, saying the subsidies were covered by an earlier, permanent appropriation.
Thursday’s ruling might represent Republicans most noteworthy victory in trying to dismantle the ACA. If the ruling is upheld, it could undermine the stability of the program due to the added financial burden it would place on insurers, health policy experts said. In order for the subsidy payments to be constitutional, Congress would be required to pass annual appropriations to cover the subsidies’ cost.
The judge’s logic was quickly shot down by White House press secretary Josh Earnest, who called the lawsuit a new low in the battle over the controversial health-care law and predicted that the ruling would be overturned by the courts because it charted new ground in the separation of powers between presidents and Congress.
House Speaker Paul Ryan (R-Wis.) called the decision an “historic win for the Constitution and the American people.” He said the ruling holds the executive branch accountable to American citizens.
If Collyer's decision is upheld by higher courts, a few outcomes are likely.
One possibility is that insurers might raise their premiums if the government stops paying them for the cost-sharing reductions, which they must offer under the law. That, in turn, would trigger an increase in the tax credits the government now pays Americans to help them afford their premiums. The Urban Institute has estimated that this would cost the government an additional $47 billion over 10 years.
While the ruling might be a win for Obamacare opponents, other analysts said it puts Republican members of Congress in a tough position if they fail to appropriate the funds.
“There is a long judicial process ahead before a final decision is made,” said Marilyn Tavenner, president and chief executive of America’s Health Insurance Plans, in a statement. The judge’s ruling will not affect coverage for now, she said.
In the long run, it's not totally clear how much the ruling could damage the ACA if a federal appeals court or the U.S. Supreme Court were to uphold it.
Check out Off The Grid's report on Healthcare spending:
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