U.S. House of Representatives v. Burwell (U.S. District Court, District of Columbia)

VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA Repeal >> Pending Legal/Constitutional Challenges >> U.S. House of Representatives v. Burwell (U.S. District Court, District of Columbia) (last updated 12.24.17)

Overview

House Republicans filed suit against the Department of Heath and Human Services in the D.C. district court (11.21.14). With a new administration in 2017 and a new HHS head, the case was titled U.S. House of Representatives v. Price. The case was settled on 12.15.17.
Two issues were at stake.

  • Cost Sharing Subsidies.  According to the Wall Street Journal, “one focus is an authorization that the government pay back insurers for discounts they are required to offer low-income enrollees. The House lawsuit alleges that while that program was authorized by the law, Congress never appropriated money to pay for it.”
  • Delay of Employer Mandate.  According to the Wall Street Journal, the complaint also claims the administration acted illegally when it twice delayed enforcement of the requirement that large employers [50 or more employees] “offer coverage to workers or pay a penalty.”  In July 2013, the administration deferred this mandate until 2015. Seven months later, the administration announced a further delay, until 2016, for employers with 50 to 99 employees.

Arguments for Plaintiff 

General Argument

In The Case for Suing the President, David B. Rivkin Jr. and Elizabeth Price Foley summarize the general justification for this suit:

  • “A president who unilaterally rewrites a bad or unworkable law, however, prevents the American people from knowing whether Congress should be praised or condemned for passing it. Such unconstitutional actions can be used to avert electoral pain for the president and his allies. If Mr. Obama can get away with this, his successors will be tempted to follow suit. A Republican president, for example, might unilaterally get the Internal Revenue Service to waive collection of the capital-gains tax. Congress will be bypassed, rendering it increasingly irrelevant, and disfranchising the American people.”
  • “Litigation in federal court is an indispensable way to protect all branches of government against encroachment on their authority. States have successfully sued to stop federal intrusions into their constitutionally reserved powers. State legislators have also successfully sued to protect their institutional authority when state executives nullified their legislative power. The executive branch is no different.”

Standing to Sue

Constitutional expert James Blumstein at Vanderbilt Law School has asserted: “There are many reasons for courts to avoid getting sucked into disputes like this. But if Congress ever has standing to raise an institutional claim, this is one of the best issues on which to do it, because the power to control spending through appropriations is an institutional prerogative of Congress under the Constitution.”

Cost Sharing Subsidies

The specific justification for the challenge to the cost-sharing subsidies lies in the constitutional provision “No money shall be drawn from the Treasury, but in consequence of appropriations made by law.”

  • On 7.8.16, the House Ways and Means Committee and the House Energy and Commerce Committee released a report titled Joint Congressional Investigative Report into the Source of Funding for the ACA’s Cost Sharing Reduction Program. “The 150-plus page report… chronicles the Committees’ alarming findings about the Obama Administration’s decision-making processes on the source of funding for the CSR program.”
  • No Appropriations Ever Made. According to NY Times (11.30.14), President Obama originally requested funds as part of the budget he sent Congress in April 2013, but Congress never acted on that request. “In a report last year, the nonpartisan Congressional Research Service said it appeared that there was no appropriation for cost-sharing subsidies, in contrast to the tax credits, for which Congress has provided a “permanent appropriation.”
  • How Cost Sharing Subsidies Are Currently Financed. Since the subsidies were viewed as essential, the administration began making the payments early in 2014, using funds from a separate account established for tax refunds and tax credits.  In contrast, “Congress provided an open-ended appropriation for tax refunds more than 30 years ago, and in the health care law it said the money could be used for tax credits that subsidize insurance premiums.”  This provides a legal basis for funding the $855 billion in premium subsidies over the next 10 years, but the equivalent rationale cannot be used for the cost-sharing subsidies. Nevertheless, “Sylvia Mathews Burwell, the secretary of health and human services, who was previously the White House budget director, said officials were using the same account for both types of assistance “to improve the efficiency in the administration of subsidy payments” under the health care law.”

Antideficiency Act

  • According to NY Times (11.30.14), “under a law known as the Antideficiency Act, federal employees are subject to civil and criminal penalties if they spend money in excess of appropriations. Agencies report 10 to 20 violations a year. Under another law, public funds can be used only for the purposes specified by Congress in appropriations.”
  • Professor Josh Blackman writes (5.25.16) the following: “On May 11, under subpoena by the House Ways & Means Committee, David Fisher was deposed about the Obama administration’s funding for the ACA’s Section 1402 cost-sharing payments. (For a background of this issue as it relates to House of Representatives v. Burwell, see this piece in National Review). Fisher served as the IRS’s Chief Risk Officer. In a nutshell, Fisher was concerned that there was not a valid appropriation… In this (lengthy) post, I digest the 73-page deposition into a narrative (with record cites) to try to explain from Fisher’s perspective what transpired. I’ll offer my commentary in a later writing. Here, I’d like to establish the record as clearly as I can.”
  • The NY Times (5.31.16) reports on a secret meeting between White House officials and IRS officials, during which some expressed concern over the legality of the payments. “Upon arrival, the I.R.S. officials, some of whom had expressed doubts that the Obama administration had the proper authority to spend billions of dollars on a crucial element of its health care law, were ushered into a conference room. There, they were presented with an Office of Management and Budget memo laying out the administration’s justification for spending $3.9 billion on consumer health insurance subsidies. They were told they could read it but could not take notes or make copies.”

Arguments Against Plaintiff

Standing to Sue 

  • According to NY Times (11.30.14), “Republicans face a significant hurdle in getting a court to rule on their lawsuit. They must first show that they have standing to challenge the administration’s action. Courts often refrain from getting involved in disputes between Congress and the executive branch. Some judges have agreed to consider cases in which a house of Congress explicitly authorized a lawsuit claiming an “institutional injury.”
  • According to Nicolas Bagley (5.22.17), “The D.C. Circuit is likely to be skeptical of the district court’s conclusion that the House of Representatives has standing to sue. That’s why the states want the court to decide the case quickly: they hope to get rid of the lawsuit once and for all.”

Cost Sharing Subsidies

According to Timothy Jost: “The House argues that it has not explicitly appropriated funding for the cost-sharing reductions and that the Constitution prohibits the expenditure of public funds without an explicit appropriation. The administration, however, relies on Chief Justice John Roberts’s admonition in King that ‘A fair reading of legislation demands a fair understanding of the legislative plan.’ The ACA links the cost-sharing reduction payments, through an integrated legislative plan, to the premium tax credits, for which Congress has indisputably provided a permanent appropriation. Thus, the administration contends, no additional annual appropriation is needed.”

Funds Have Already Been Appropriated

Salon’s Jordan Weissmann explains that “the House Republicans’ argument might be a lot more feeble than it looks, as David Super, a Georgetown University law professor, explained to me. By passing the Affordable Care Act and instructing the administration to pay insurers their subsidies, Super said, Congress effectively appropriated the funds to do it. ‘The Supreme Court has been very clear that you do not have to have a law that says Appropriations across the top. You just need a law directing that the money be spent,’ he said.”

Congress Can Block Subsidies Through Legislation

According to The Hill, the administration argued in July that Congress “has brought this unprecedented suit, asking this Court to violate the separation of powers by wading into a dispute between the political Branches over the interpretation of the ACA and Section 1324, and to do for the House what the House will not use its legislative authority to do for itself.”

Congress Understood the Legality of the Subsidies 

As the Hill reports, administration officials contend Congress ”even passed a bill, the No Subsidies Without Verification Act, that was premised on the idea that the funds were available.”

Timeline

Status

Prior to 2016 Presidential Election

According to Timothy Jost (1.7.16), “Given the importance of the constitutional issues raised by the case and the fact that Collyer admitted that her decision was unprecedented, the government asked her to allow an interlocutory appeal to the U.S. Court of Appeals for the District of Columbia Circuit to decide the constitutional jurisdictional question before she examined the merits of the case.

  • On October 19, 2015, Collyer denied their request, holding that the case would proceed more quickly if she decided the merits first.” She will decide the case in spring 2016. “If she decides against the administration, her decision will certainly be appealed, perhaps ultimately to the Supreme Court.”
  • According to Sara Rosenbaum, it “could take years” for the D.C. Circuit Court of Appeals, and ultimately the United States Supreme Court (should it choose to do so), to review Collyer’s decision.
  • According to Nicholas Bagley (2.12.16), “The government has requested oral argument in the case, but a hearing date has yet to be scheduled.” The court will issue an opinion “presumably about a month or so after a hearing date.”
  • On May 12, 2016 the district court in Washington, D.C., handed the House of Representatives a victory. The court agreed with the House that the Obama administration lacks the power to make the challenged payments to health plans. The court also reaffirmed its earlier decision holding that the House had standing to sue the administration. Collyer stayed implementation of the ruling. The administration plans to appeal the ruling.

After 2016 Presidential Election

  • According to the Associated Press (11.16.16), the election of Donald J. Trump to the Presidency means his administration could clear the lawsuit from the dockets. “Trump, who has vowed to start taking apart the health care law on the first day of his administration, has a tailor-made opportunity: His administration could simply agree with the House that the payments are unconstitutional, and stop contesting the lawsuit. ‘The Trump administration could immediately turn off the tap for making cost-sharing payments,’ said Mark Regan, legal director of the Disability Law Center of Alaska in Anchorage, and a defender of the law. ‘Turning the payments off would come close to destroying the market.’ Insurers could be stuck with massive losses because they would still have a legal obligation to cover patients’ out-of-pocket costs, but would get no reimbursement from the government.”
  • Nicholas Bagley suggests (11.10.16) that “without an appropriation, it’s unconstitutional to pay money from the U.S. Treasury. Not only is it unconstitutional, it’s a crime under the Anti-Deficiency Act. Stopping the payments is arguably the only constitutionally available course of action. But I wonder if it’s that simple… President Trump may be able to keep making cost-sharing payments until Congress can devise a repeal-and-replace plan, assuming that happens relatively quickly. I don’t pretend for a moment that the question is free from doubt—these are deep constitutional waters—but it seems to me that there’s a plausible argument for remedial flexibility. Whether President Trump will use that flexibility is another question altogether.”
  • According to JDSupra (11.23.16) “in its motion filed on November 21st, the House has asked the court to pend the case until February 21st, to give the incoming Trump administration the opportunity to decide whether to amend, repeal or replace the ACA. According to the motion, representatives of the House and the Trump transition team are in discussions regarding options that could resolve the matter. The House motion notes that the Obama administration opposes the request for a hold.”
  • Law professor Josh Blackman notes (11.23.16) that HHS, in its opposition brief, argues that there is no indication that the new administration will take a different position with respect to the House of Representatives having standing to sue the President… “But I think HHS’s motion misses the obvious: the Trump Administration will likely cut off the payments, which moots the case. Standing is irrelevant. There is no need to litigate this further. Specifically, even if these payments are shut off, insurances companies (as I understand it) are not allowed to increase costs charged to customers. The insurers would then need to sue in the Court of Claims for the unpaid money. Stay tuned if the judgment fund is amended to prohibit payment of such bills. Trump, who apparent loves stiffing contractors he doesn’t like, may find this approach all-too-appealing.”
  • On January 13, 2017, Timothy Jost reported that “on December 20, 2016, two beneficiaries of reduced cost sharing under the Affordable Care Act (ACA) asked the D.C. Circuit court of appeals to allow them to intervene in House v. Burwell… On January 12, 2017, the D.C. Circuit denied the motion to intervene in a one paragraph unsigned order stating that the requirements for intervening on appeal had not been met, with no further explanation. This litigation is now in the hands of the Trump administration and the House. It is clear that a settlement that would immediately terminate the cost-sharing reduction payments would very quickly unravel the individual insurance markets. Insurers would in all likelihood withdraw from the marketplaces, and from the entire individual market, as quickly as they could and as many as 20 million Americans would be left without coverage. Those who will lose their coverage will now not be represented in court to plead for the court’s protection.”
  • The Hill (2.21.17) reported that “Republican lawmakers and the Department of Justice have asked for more time Tuesday to decide whether they want to move forward in the House’s lawsuit over ObamaCare’s cost-sharing subsidies. The House and the DOJ made the request in a joint motion Tuesday… The motion Tuesday grants the House and the DOJ until May 22 to file a status report with the court and establishes 90-day deadlines after that. The House has asked for delays in the proceedings after Trump won the election in November.”
  • Nicholas Bagley (2.27.17) notes that the House ACA replacement bill, leaked in February 2017, doesn’t address the CSRs. “More immediately to the point, the leaked bill doesn’t appropriate money for the 2018 and 2019 cost-sharing reductions. At the same time, the district court in House v. Burwell held (correctly) that there’s no appropriation to keep making those payments. The court’s injunction has been stayed pending appeal to the D.C. Circuit, where the case is being held in abeyance. But nothing prevents the Trump administration from dismissing that appeal and ending the cost-sharing payments. Were it to do so, the exchanges would collapse immediately. Does Congress plan on doing anything to prevent that possibility?”
  • The Atlanta Journal Constitution reported (3.29.17) that “late last year, with a new administration on the other end of the suit, the House sought to pause the proceedings — with a deadline for a status update in late May. The Trump administration and House lawmakers have to report to the judge this spring. If the Trump administration drops the appeal, it would mean the subsidies would stop being paid — a huge blow to the marketplaces and millions of people. If lawmakers wanted the payments to continue, they would have to find a way to fund them. One opportunity for that is coming up fast, the continuing resolution that must be passed by April 28. If the Trump administration continues the lawsuit, it will be in the odd position of fighting its own party… In the interim, it has been the status quo: The cost-sharing reduction payments are being made each month. Lobbyists for the insurance industry are meeting with lawmakers to pressure them to continue funding cost-sharing reductions.”
  • The Daily Caller (4.5.17) reports, in an article titled “The Potentially ‘Unconstitutional’ Obamacare Feature Everyone Is Ignoring,” that “a troubling result of the appeal and numerous Republican-led delays is that CSRs are still funded as they were when the Obama administration first appealed. Trump and Ryan will soon have to come to a decision: pursue or withdraw the Obama administration’s appeal. If the pair decide to forward the appeal and the 2016 ruling is upheld, Trump and Ryan would be one step closer to their goal of dismantling Obamacare. Withdrawing from the appeal, however, could bring a host of economic and political problems upon the new administration”:
    • If Trump decides to let Obamacare ‘implode’ and withdraws the appeal, he will effectively leave insurers with up to $7 billion in bad debt and consumers with backbreaking premiums. As it stands, some $7 billion is allocated to CSRs this year and another $10 billion is slated for 2018.
    • The problem then for Trump and Republican leadership is that if they don’t fund the program for 2017, they put insurers who are already paying out billions in CSRs, in hot water, leaving them without any chance of reimbursement from the federal government. Even if Republicans decide to postpone decision-making until 2018, the same problem presents itself.
    • Due to the way Obamacare is structured, if Trump and Ryan choose to not reimburse insurers for CSRs, insurers would be forced to increase plan premiums. The excess cost will be shifted to the larger consumer base through higher premiums, according to the Department of Health and Human Services (HHS) and the Urban Institute.
    • The resulting higher premiums would translate into higher federal costs, in the form of increased Premium Tax Credits (PTCs). The situation presents a fiscal policy dilemma for the federal government, as more people are eligible for PTCs than CSRs, which would lead to substantive increases in federal costs, Health and Human Services reports.
    • If the federal government chose not to reimburse for CSRs, insurers would have to increase silver plan premiums to make up the difference. If consumer preferences remain unchanged, premiums for silver plans would have to increase by over 20 percent to account for the change in AV.
    • Researchers warn that such a situation would drive a large swath of consumers to change their respective insurance plans, which would cause insurance providers to increase premiums for silver plans as much as 30 percent, or $1,040 per person on average, the Urban Institute reports.
  • According to the Wall Street Journal (4.12.17) “President Donald Trump dug back into the fight on Wednesday, threatening to withhold payments to insurers to force Democrats to the negotiating table. In an interview in the Oval Office, Mr. Trump said the White House may lack authority to make the payments established under his predecessor to reduce copayments and deductibles for some of the poorest customers who buy insurance under the 2010 Affordable Care Act. Cutting off the payments could trigger turmoil in insurance markets. ‘I don’t want people to get hurt,’ Mr. Trump said. ‘What I think should happen—and will happen—is the Democrats will start calling me and negotiating.’”
  • Modern Healthcare (5.22.17) reports that “the Trump administration asked the U.S. Court of Appeals for the District of Columbia Circuit to hold the case in abeyance for another 90 days, as ‘the parties continue to discuss measures that would obviate the need for judicial determination of this appeal, including potential legislative action,’ the request said.”
  • According to Politico (10.12.17), the administration is ending CSR payments to insurance carriers. “Press secretary Sarah Huckabee Sanders confirmed the decision in a statement emailed to reporters Thursday night. ‘Based on guidance from the Department of Justice, the Department of Health and Human Services has concluded that there is no appropriation for cost-sharing reduction payments to insurance companies under Obamacare,’ she said. ‘In light of this analysis, the Government cannot lawfully make the cost-sharing reduction payments. … The bailout of insurance companies through these unlawful payments is yet another example of how the previous administration abused taxpayer dollars and skirted the law to prop up a broken system.’”

States’ Motion to Intervene

  • On May 18, 2017, a Motion to Intervene was filed by the states of California, New York, Connecticut, Delaware, Maryland, Massachusetts, Vermont, Washington, Hawaii, Illinois, Iowa, Kentucky, Minnesota, New Mexico, Pennsylvania and the District of Columbia. The states claim that withdrawal of the CSRs “threatens catastrophic harm to the States themselves, to the health insurance markets they regulate and administer, and to their residents who rely on those markets to obtain affordable insurance vital to their continued health and well-being.”
    • According to Nicolas Bagley (5.22.17), “This is a bigger deal than it may seem, and could offer some comfort to insurers that are in desperate need of it… the states are very likely to prevail. Not on the merits: as I’ve written before, the House is right that there’s no appropriation to make the cost-sharing payments. But the D.C. Circuit is likely to be skeptical of the district court’s conclusion that the House of Representatives has standing to sue. That’s why the states want the court to decide the case quickly: they hope to get rid of the lawsuit once and for all.”
  • According to law professor Josh Blackman (8.1.17), a three-judge panel of the D.C. Circuit (Millett, Pillard, and Wilkins) granted several states, along with the District of Columbia, a motion to intervene in House v. Price. “This motion to intervene is premised on the fact that the House of Representatives continues to prosecute the appeal, and the Trump Administration decides to dismiss the appeal. The far more likely scenario is that the Trump Administration simply cuts off the payments and the House, claiming victory, drops the case. There is no need for Trump to drop the appeal… If the executive branch takes that route, the case of House of Representatives v. Price becomes moot. At that point, the states, along with insurance companies, and not to mention ACA beneficiaries, go right back to district court to seek a TRO to restore the payments. Thus, the decision to allow the intervention only has upside if Trump declines to appeal the judgment, but the House continues to prosecute the case.”

Settlement (12.15.17)

  • “The Trump administration has settled a long-fought lawsuit with the House and Democratic attorneys general over payments to Obamacare insurers. Details of the settlement agreement were not available, according to a report in Bloomberg. President Trump said in October that he would not make the payments next year because of concerns about constitutionality, despite insurers threatening to raise premiums to offset the loss of the payments. After the payments were halted, a group of liberal states’ attorneys general sued to restore them. This settlement appears to address those lawsuits as well, Bloomberg said.” (Washington Examiner, 12.15.17)
  • According to law professor Josh Blackman, “The case that began as House of Representatives v. Burwell, and is now House of Representatives v. Hargan, has been lingering in the D.C. Circuit for months. With the various legislative efforts to repeal the ACA, the court has kept the case on hold. Today, two filings were made in the District Court that should bring the case to a close… This settlement thus maintains a status quo of sorts. The payments won’t get made, there is no ongoing order concerning the executive’s obligation to make the payments, and the D.C. Circuit won’t decide if standing is appropriate for the House of Representatives. Also, the states had little chance of success here. Rather, the litigation will shift to the Court of Federal Claims as insurers seek reimbursements for the CSR payments, and in other parallel actions… Fascinating. They promise to never cite Judge Collyer’s opinion. Thus, the case was settled on the grounds that the court’s opinion does not set that precedent.”

Prior Prospects

  • PolitiFact.com (8.1.14) reported that “the House as a whole has never sued the president. However, individual lawmakers and groups of lawmakers have sued the president in the past. In fact, we found at least 14 instances in the last four decades alone.”  According to Wall Street Journal, “The unusual lawsuit likely faces preliminary hurdles. U.S. District Judge Rosemary M. Collyer, who was nominated by President George W. Bush in 2002, will have to consider whether the House has the legal right, or standing, to sue the administration. Even if it does, legal doctrine holds courts are inappropriate venues to resolve certain “political questions” better left to the democratic rough and tumble. Moreover, unlike private parties, Congress has its own constitutional process for punishing a president it believes has egregiously transgressed: impeachment.”
  • The Hill pointed out that Federal Judge Federal District Judge Rosemary Collyer appeared skeptical of the administration’s position in a May, 2015, preliminary hearing to determine if the House had legal standing. “‘I want to know where you find the appropriation,’ Collyer pressed the administration.”
  • Nicholas Bagley (6.1.16) wrote that “the House’s unprecedented lawsuit is thus unlikely to survive appeal. But the law governing who has standing to sue is malleable enough that the House could perhaps eke out a victory.”

Potential Impact

Budgetary Impact 

  • According to Timothy Jost (1.7.16), these subsidies will cost $5 billion in 2015 and $136 billion over the next 10 years.
  • Reuters reports (4.25.17) that “the government could save $10 billion by revoking the payments, Kaiser said. But insurers that remain in the market would have to hike premiums nearly 20 percent to cover their losses, Kaiser found, so the government would have to spend $12.3 billion on tax credits to help pay for Americans’ premium costs – a net increase of 23 percent on federal spending on marketplace subsidies. The projection assumes that insurers remain in the marketplace next year. Health policy experts have said without the payments, many insurers could not afford to stay in the market and will likely exit, which would leave some U.S. counties without an insurer.”

Impact on Enrollees

Cutting Obamacare Subsidies Would Benefit Poor, Says CBO. “The Congressional Budget Office has issued a new report on the projected effects of terminating cost-sharing reduction subsidy payments under the Affordable Care Act, as President Trump has repeatedly threatened to do.  These findings are counterintuitive and surprising. CBO found that cutting off these payments would on balance tend to benefit low-income people (especially those nearing retirement age), albeit at considerable cost to taxpayers. Without agreeing or disagreeing with CBO’s projections, let me try to explain what it found.” (E21, 8.16.17)

Number of Enrollees Affected

  • Timothy Jost asserts: “Were the House to succeed in this claim, the consequences would be nearly as devastating as those that could follow from King v. Burwell. Nearly 60 percent [56%,  5.6 million] of enrollees in qualified health plans through the marketplaces are the beneficiaries of cost-sharing reduction payments, which make health care as well as health insurance affordable by reducing deductibles, coinsurance, copayments, and out-of-pocket limits for lower-income enrollees.”
  • ACA enrollment expert Charles Gaba notes that “unlike King v. Burwell, which ‘only’ would have directly injured 6.5 million people across 34 states, if successful, this lawsuit would threaten CSR assistance for millions of enrollees in every state. However, due to the lower income range eligible for CSR (up to 250% FPL vs. 400%) and the limitation to Silver plans (vs. every metal level), the actual number of people impacted would still be lower: Around 5.85 million people as of March (likely slightly higher now…perhaps 5.9 million as of today). Then again, assuming it does end up snaking it’s way up to the SCOTUS by next spring or summer, and assuming total exchange enrollment increases from the current 10.3 million by, say, 20% to around 12.4 million or so, that number could be as high as 7.1 million people by then. Even worse, in King v. Burwell, you could at least plausibly argue that a small portion of the 6.5 million directly impacted (perhaps a few hundred thousand at the upper end of the subsidy range) wouldn’t have been directly hit too badly, since they’re receiving much smaller credits against (relatively) larger incomes. If the CSR assistance is removed, pretty much everyone impacted would be seriously screwed, since it’s only available to people making less than 250% FPL anyway.”

Impact on Insurance Market

  • Pacific Research Institute’s Sally Pipes explains (6.20.16) that “Obamacare prohibits insurers from raising out-of-pocket costs for many enrollees in the ACA exchanges. Without the federal subsidies, insurers will have to swallow an estimated $9 billion in costs in 2017 — and $170 billion over the next decade.They’ll compensate by raising premiums — for everyone. Alternatively, insurers could simply leave the exchanges. Several have already determined that operating in these marketplaces is prohibitively expensive. UnitedHealth Group, the largest insurer in the country, has withdrawn from 31 state exchanges and remains active in only three. Humana has decided to pull out of Virginia’s and Alabama’s exchanges in 2017. Less competition in the exchanges will yield higher prices — and fewer choices for consumers.”
  • According to Paul Keckley (5.24.16), “uncertainty about House v. Burwell will have immediate and significant impact regardless of the judicial process. It creates a domino effect that industry stakeholders will feel immediately: Health insurers will raise premiums or exit the marketplaces altogether; Bad debt for hospitals will increase; The politics of the ACA, and Supreme Court appointments of the next President, will become big topics in Campaign 2016.”
  • According to Nicholas Bagley (2.12.16), “As I explain here, insurers will likely be able to file lawsuits in the Court of Federal Claims to recoup what they’re owed. But that’ll take time and recovery isn’t guaranteed. In the meantime, the ACA will still require insurers to give a cost-sharing break to their low-income customers. The federal government won’t be able to pay insurers back, however, which will force insurers to raise premiums on all their customers to cover the shortfall.”
  • Urban Institute (1.16) per Nicholas Bagley (2.11.16): “The Urban Institute recently released a study by Linda Blumberg and Matthew Buettgens—highlighted prominently in the administration’s brief—that does just that. The study is carefully hedged; there’s loads of uncertainty here, and Urban doesn’t factor in the possibility of recovering the money through litigation. Still, the top-line figures are arresting. Under Urban’s model, premiums for a silver plan would increase, on average, by $1,040 per person. Cost-sharing subsidies would end, but premium subsidies would go up, yielding $3.6 billion in increased federal outlays each year. Yup, that’s right. If the House wins, it’ll increase federal spending by billions of dollars.”
  • Sara Rosenbaum (9.24.15): “Without cost-sharing assistance, several things could happen to the 5.5 million people who, as of June 2015, received help. (About 2 million more would qualify for subsidies were they to choose a silver plan). First, the cost of care would rise—a lot—which in turn could lead many enrollees with less costly health needs to drop their plans. This would have the effect of skewing the marketplaces’ risk pool toward the sickest people, thereby raising premiums for everyone. Second, because insurers that participate in the marketplaces are legally obligated to provide cost-sharing assistance, they could suffer significant financial losses or decide to exit the marketplaces entirely, leading to major erosion of state insurance markets.”

Legal Impact

  • Timothy Jost warns: “[Collyer’s] decision, however, raises the possibility — indeed the likelihood, given existing precedents — that the Court of Appeals may later find that Collyer herself violated the Constitution by deciding a case that the Constitution prohibits her from hearing.”
  • According to Salon’s Jordan Weissmann, “If the administration did lose at court, insurers would still be entitled to their subsidy payments under the law. Therefore, they could simply file their own suit against the federal government at the Court of Federal Claims and collect the money owed to them.”
  • According to Timothy Jost, “on May 17, 2016, the New Mexico Department of Insurance issued a bulletin authorizing its insurers to include language in their marketplace insurance policies stating that if the House succeeded in House v. Burwell and cost-sharing reduction payments were no longer available, the insurer would cease allowing cost-sharing reductions. The state department has reportedly been told by CMS that this language would not be legal. This is correct. The ACA requires insurers to reduce cost-sharing for income-eligible silver-plan marketplace enrollees. The statute also requires the government to reimburse the insurers for these reductions, but the cost-sharing reductions are not conditional on the reimbursement. Insurers could, of course, increase premiums to cover the cost-sharing reductions or sue the government in the Court of Claims, as a number of insurers are now doing to collect the money the government owes them under the risk corridor program, but there is no authority in the ACA for an insurer to simply stop reducing cost sharing.”

Impact on the Rule of Law

Megan McArdle observes (5.13.16) that “if the executive branch can just decide what money ought to be spent to satisfy the purposes of a badly written law, then we end up in a pretty bad place: Congress has no incentive to pass well-written laws, because the executive branch will essentially rewrite the law at will… Moreover, if the case is struck down because Congress does not have the standing to sue over the proper execution of the laws it passes (an argument that Jonathan Adler, one of the architects of the last round of Obamacare suits, thinks has real merit) we also end up in a pretty bad place. This seems superficially appealing to people who really wish we lived in a parliamentary system, because it would give the president some of the same sort of fiat powers that prime ministers have. But we do not live in a parliamentary system, and allowing the executive branch to run free of congressional control this way would not give us one.”

Net Worth Sweep

In early February, 2017, analysis appeared to indicate that the Obama administration had diverted funds to continue the cost-sharing subsidies unauthorized by Congress. This program was called the “Net Worth Sweep.”

  • Trump Should Stop Obama Scheme That Steals Money For Obamacare. “Within weeks, however, the subsidies were miraculously funded, against the will of Congress. Recently revealed documents appear to confirm that the sudden influx of Obamacare funds was money the Obama administration diverted from Fannie and Freddie… Obamacare apparently illegally devoured billions of dollars from government-sponsored enterprises committed to helping struggling American accomplish their dream of owning a home… This raiding of Fannie and Freddie profits has become known as the ‘Net Worth Sweep.’ The maneuver, which takes place regularly with no Congressional authority, inappropriately diverted $240 billion in dividends from investors to federal programs such as Obamacare, according to Corsi. The next Net Worth Sweep is scheduled to take place on March 31. But it doesn’t have to.” (Daily Caller, 3.23.17)