House Republicans’ ACA lawsuit Moves Forward
By Lisa Schencker Modern Healthcare September 9, 2015
Just months after the Affordable Care Act survived a serious legal threat at the Supreme Court, a federal judge gave a boost Wednesday to what could be yet another a major court challenge to the healthcare law.
U.S. District Judge Rosemary Collyer decided House Republicans have standing to sue over their allegation that the administration is illegally spending money that Congress never appropriated for the law’s cost-sharing provisions. Those provisions include reduced deductibles, copays and coinsurance for many beneficiaries depending on income.
The House had to prove it was injured by the administration’s actions in order to gain standing. Collyer, who was nominated by President George W. Bush, wrote that if that allegation regarding is appropriations is true, “the House has been injured in a concrete and particular way that is traceable to the secretaries and remediable in court.”
“As the House argues, Congress cannot fulfill its constitutional role if it specifically denies funding and the executive simply finds money elsewhere without consequence,” Collyer wrote. “Indeed, the harm alleged in this case is particularly insidious because, if proved, it would eliminate Congress’s role via-a-vis the executive.”
The judge also wrote, however, that the House does not have standing to sue over a separate allegation in the lawsuit that the administration had no right to delay the law’s employer mandate, which requires companies with 50 or more employees to provide coverage.
The Obama administration has argued that insurers have a legal right to reimbursement for cost-sharing reductions mandated under the law, citing a part of the statute that says HHS “shall make periodic and timely payments to the issuer equal to the value of the reductions.”
The administration also argued that the House shouldn’t be granted standing because the fight is essentially a political one.
House Speaker John Boehner (R-Ohio) issued a statement praising Collyer’s opinion. “The president’s unilateral change to Obamacare was unprecedented and outside the powers granted to his office under our Constitution,” Boehner said.
Now that the case is moving forward, some experts say it could pose a significant threat to the law itself.
About 56% of Americans who receive coverage through the ACA’s insurance exchanges get cost-sharing reductions, lowering the amounts they pay out-of-pocket for deductibles, coinsurance and copayments, according to the CMS. That equals about 5.6 million people.
Without the reductions, “most of the people in the exchanges are not going to want to participate in the exchanges because most exchange participants are receiving cost-sharing subsidies,” said Michael Cannon, a director of health policy studies for the libertarian Cato Institute and a key influence behind the lawsuit that led to the Supreme Court’s King v. Burwell opinion in June. If many healthy people drop out of the exchanges because cost-sharing subsidies disappear, then premiums may rise for those left in the exchanges, he said.
It’s a concern that’s similar to the one many expressed in the debate about King v. Burwell. The challengers in that case argued that the law said insurance premium subsidies should only be available to Americans in states with their own exchanges. The Supreme Court, however, sided with the government in that case in a 6-3 decision that many experts say saved the overall law.
Tim Jost, a law professor at Washington and Lee University who supports the ACA, said healthcare could become unaffordable for many Americans if House Republicans prevail in this latest case.
“If the insurers are required to provide cost sharing reductions but not reimbursed, that’s going to cause very serious financial problems for the insurers, and if they cease to provide cost-sharing reductions, it’s going to cause very, very serious problems for a lot of Americans,” Jost said.
Then again, Jost said, if the House succeeds in the lawsuit, Congress might just have to appropriate the money for cost-sharing because it’s required under the law.
There are other reasons, too, that a Republican victory in the case might not shake the foundations of the law as much as a loss for the government in King v. Burwell would have.
Richard Kogan and Edwin Park of the left-leaning Center on Budget and Policy Priorities recently wrote that beneficiaries will continue to receive cost-sharing reductions regardless of the case’s outcome because they are an entitlement under the ACA.
If Congress refused to appropriate money for the reductions, insurers could then seek relief in the U.S. Court of Federal Claims and would likely win, Kogan and Park wrote.
Meanwhile, Collyer’s ruling on standing may get reversed on appeal before the lawsuit is decided.
Jost said her decision runs contrary to precedent. “She basically concludes that she’s in uncharted waters and can decide for herself what the law should be,” Jost said.
Collyer writes in the opinion that the case is unique and asserts that her decision to grant the House standing won’t open any “floodgates, as it is inherently limited by the extraordinary facts of which it was born.”
Kermit Roosevelt, a University of Pennsylvania constitutional law expert, said it’s difficult to predict how the case might unfold given that most similar questions haven’t made it past the hurdle of establishing standing. Roosevelt said the case might end up making new law.
“There are also interesting political considerations given that the Supreme Court has heard two challenges to Obamacare,” Roosevelt said. “I wonder how much appetite they have for more of them.”