Implementing Health Reform: House Can Sue Administration Over ACA Cost-Sharing Reduction Payments (Sept. 10 Individual Market Update)

Following the SCOTUS decision that the ACA meets constitutional standards, the House of Represenatives (Republican majority) continues it's course of amending or repealing 'Obamacare'

On July 30, 2014, the House voted along party lines to file a lawsuit challenging the President. Twice private counsel that it hired to bring the case resigned, but the House finally succeeded in engaging Jonathan Turley, a conservative professor at George Washington University, to file the action.

The legal situation becomes complex in regard to the constitutionality of certain portions of the Affordable Care Act.

In a Republican dominated House of Representatives another attempt is being made in regard to the legalitiy of the ACA subsidies funded out of the general treasury.

Background

This lawsuit originated in an attempt by the House of Representatives to hold President Obama responsible for what it views as abuses of presidential power. Since 2010, the House of Representatives has been held by a substantial Republican majority. The House has been at loggerheads with the President on many issues, but in particular on health care reform. The House has voted over 50 times to repeal the President’s signature policy initiative, the ACA.

Frustrated by the difficulty of implementing an incredibly ambitious and complicated law, and by the unwillingness of Congress to help by adopting technical amendments, the administration has on a number of occasions acted unilaterally to make adjustments it believes to be necessary to implement the law. It has also interpreted the law differently than the House. The House has taken strong exception to what it perceives as actions in excess of presidential authority and in violation of the law. In 2014, the House decided to call upon the judiciary to aid it in its disputes with the President.

The Issues

The complaint, filed on November 21, 2014, focused on two issues: the decision by the administration in 2013 to delay the implementation of the employer mandate for a year, and the funding by the administration of the ACA’s CSR payments, arguably without an explicit appropriation.

The ACA offers low and moderate-income Americans premium tax credits to help make insurance affordable. These are offered through the tax system and are funded through a permanent appropriation for tax refunds.

The CSRs are obviously not free. The ACA requires the Treasury to reimburse insurers that reduce cost sharing for eligible individuals and families as they are required to do. This reimbursement is made on a monthly basis. The House, however, claims that Congress failed to include an explicit appropriation in the ACA to cover these costs, and has not appropriated funds to cover the cost of the CSRs since the ACA was adopted. Indeed, as Judge Collyer notes, the administration requested an appropriation to cover the CSRs in 2013, which was never acted on. (The administration claims that it decided no appropriation was needed).

The Constitution provides at article 1, section 9, clause 7: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law . . . .” The House claims that since no money has been appropriated for the CSR payments, they are unconstitutional.

This is not a trivial matter. If the CSR payments to insurers stopped, the insurers would still be legally required to reduce cost sharing—at a cost of $5 billion this year and $136 billion over the next ten years without reimbursement. Burdened with this cost without reimbursement through the CSR payments, many insurers would cease to offer marketplace coverage. Those that remained would have to raise rates dramatically to ensure solvency. Although much of the increase would be covered by the premium tax credits for low-income individuals, higher-income enrollees could face unsustainable increases. This could well put the marketplaces into a death spiral, where healthy people would drop coverage leaving only high cost patients behind.

Judge Collyer’s Opinion

After the filing of the case, the administration moved to dismiss the complaint for lack of standing. The plaintiffs, on the other hand, moved for a judgment in their favor on the legal issues. Judge Collyer asked the parties to first brief the motion to dismiss, and the September 9 decision addresses this motion.

Her opinion is long and very technical. She focuses on three issues:

Does the House have standing to challenge the administration’s actions (that is, has the House been injured in a particular way by those actions)?
Does the House have a legal basis for its claim?
Is the House’s claim justiciable (that is, appropriate for resolution by a court)?

Judge Collyer rejects all of the administration’s responses to this argument. When money is spent without an appropriation, the House as an institution is injured in a particular way not shared by the public as a whole, or even by an individual member. The dispute is not about implementation of a law, but about the constitutional role of Congress. Although Congress has its own means of enforcing its will, this does not bar it from resorting to the courts in constitutional disputes.

The case will certainly be decided ultimately by the D.C. Circuit, perhaps by the Supreme Court. In the meantime, however, insurers that participate in the marketplaces will be subject to considerable uncertainty, and if there is anything that health insurance markets do not need now, it is uncertainty.

A win for the House would not mean that the ACA is unconstitutional, as would have been the case had the NFIB litigation succeeded; or even that the ACA would have to be amended, as would have been the case had King v. Burwell succeeded. It would merely mean that Congress would have to appropriate funding for the CSRs to function. The appropriation process is a perpetual battleground, and this year’s is shaping up to be as bad as ever. In the end, this would merely become one more appropriation for the administration and Congress to fight over, and one more reason why the fate of the ACA might turn on who is in charge of the next administration.

Summation

Even with less than 18 months left in President Obama's tenure in the White House, Republicans continue to chip away at the ACA. If the Republicans maintain a majority in the House of Represenative, and re-capture 1600 Pennsylvania Avenue it is almost certain that there will be significant changes to the ACA.

This however will create more havoc in unwinding the gordeon know of the ACA.

The ACA is mostly about health insurance reform and several peripheral issues such as payment reform, the establishment of Affordable Care Organizations, all of which may be exclusive to themselves. Some of the goals of the ACA are to make health care more affordable. This has yet to be determined in the short term.

Proponents of the law claim the cost savings are already significant. Others would point out that the infusion of significant public funds have allowed the ACA to work.