The constitutionality of Obamacare was once again challenged in court. This time the argument has to do with a little known portion of the Affordable Care Act that provides subsidies to insurers for offering policies with reduced out of pocket expenses. It is something called Cost-Sharing Reduction or CSR for short.
Suing for what ?
The suit was filed in a district court that was expected to be more favorable to Republicans.
The judge presiding over the case was appointed to the district court by former president George W. Bush.
♦ House Republicans argued that Congress never specifically appropriated the money for these subsidies and the Obama administration had no right to spend money that was not authorized.
The administration argued that the law authorized the money automatically because the program is considered an entitlement.
The presiding judge agreed with the plaintiffs.
• The court challenge was launched in 2015 by House Republicans over the objections of the Democrats.
Republicans view this as way to fight back against what they see as an over reach by the Obama administration.
The Democrats see this as just one more failed attempt at derailing the Affordable Care Act (Obamacare).
• At stake is about $175 billion dollars the government will pay to reimburse insurers over the next decade.
This is separate from the financial assistance provided under the law to help people pay for monthly premiums. That assistance is called premium tax credits.
Cost-sharing reductions are a way for the federal government to reimburse insurance companies that provide plans with reduced out of pocket costs.
♦ For people earning less than 250 % of the Federal Poverty Level (FPL) this can result in very large savings when they actually use their medical plan.
What happens next?
Nothing, for now. The judge stayed the ruling, giving the administration time to appeal. The administration is expected to appeal the ruling to the U.S. Court of Appeals for the District of Columbia Circuit where the majority of the judges were appointed by Democrats. If the administration fails in this court there will most surely be an appeal to the U.S. Supreme Court. If the case is dragged into the Supreme Court it is not likely to get resolved before President Obama leaves office.
• Update October 21, 2017
President Trump cut off payments to insurers. When the payments stop, insurers must still provide the cost-sharing reductions but without any special compensation.
Senators Lamar Alexander and Patty Murphy have a bipartisan proposal that would guarantee these payments for two years. It is not likely to receive a vote since President Trump and the GOP leadership are resistant to any efforts that might stabilize Obamacare.
• Update June 1, 2017
The House GOP bill to repeal and replace the Affordable Care Act would continue the CSR payments until 2020 but would not appropriate those funds, leaving insurers uncertain whether they would receive the payments.
The Obama administration argued in its appeal that House Republicans lacked standing to bring the original suit, because U.S. Supreme Court precedent holds that political disputes between the executive and legislative branches should be resolved through political mechanisms, not through the courts.
The Trump administration has sent mixed signals on whether it intends to continue paying the subsidies. It's not clear what position the Trump administration will take in the appeal or whether it will even continue fighting the district court ruling.
The appeals court is likely to keep the case on hold while congressional Republicans move to repeal and replace the ACA. If there is no replacement the House could simply drop the suit.
If the Trump administration decides on its own to stop making the payments. A new lawsuit would likely be filed to force the administration to continue payments.
•Update May 18, 2017
On Thursday, 16 attorneys general from both Republican- and Democratic-led states filed a motion to intervene in House v. Price, a case originally brought by House Republicans.
The state attorneys general argue that the Trump administration is not adequately representing their interests in the appeal. They claim their states' interests would be gravely harmed if the CSR payments stop because many insurers would exit the individual insurance market, premiums would rise sharply, many of their residents would be left uninsured, and state and local governments would face heavy costs in paying for medical care for the newly uninsured people.
The states seeking to intervene in the case are California, Connecticut, Delaware, Hawaii, Illinois, Iowa, Kentucky, Maryland, Massachusetts, Minnesota, New Mexico, New York, Pennsylvania, Vermont, Washington and the District of Columbia.
• Update Feb. 21, 2017
The House GOP and the Trump administration filed a motion in the U.S. Court of Appeals asking for a three month extension. House GOP lawmakers are in the uncomfortable situation of suing Health Secretary Tom Price, who took over after Burwell. The subsidies continue to be paid during the appeal.
• Update Nov. 21, 2016
The House of Representatives filed a motion to delay (stay) the appeal. They asked the court to put the appeal on hold until the end of February, when the Trump administration would be in place. In this way, the Trump administration could then drop the appeal and allow the lower court's ruling to take effect, essentially cutting off funding for cost-sharing reductions for millions of Americans.
The court initially agreed. But on December 20th two cost-sharing recipients asked the court to allow them to intervene in the case. This would in effect allow them to continue the appeal even if the Trump administration did not want to. After a number of lengthy rebuttals from lawyers representing the House of Representatives, the court agreed with the recipients in part.
On December 29th, the court gave the House of Representatives until January 6th to respond to the merits of the intervention and the recipients until January 11th to file their reply.
♦ About 12.7 million people are covered under insurance markets created by the Affordable Care Act (ACA). Just how many are benefiting from cost-sharing reductions is not clear. One source put the estimate at close 7 million people benefit from these plans.
Generally people living in lower income states represent a greater percentage enrolled in these plans. For example, in Georgia there are about 580,000 people enrolled in plans created as a result of the ACA. Of these approximately two-thirds are enrolled in plans that benefit from cost-sharing reduction.
Should the House Republicans win the case, insurers would still be required under the law to provide cost-sharing reductions. But since the insurers would no longer be reimbursed by the government they would most likely raise their premiums to cover these costs.