Judge rules Obama admin improperly funding ACA subsidy

A federal judge has ruled HHS and the U.S. Treasury Department don’t have the power to spend funds for reducing deductibles, co-pays and other “cost-sharing” means by insurers without congressional approval.

Judge Rosemary Collyer’s decision in the lawsuit brought by House Republicans dealt with two sections of the Affordable Care Act: tax credits designed to make premiums more affordableand the cost-sharing reduction payments to insurers. While the Obama administration argued the insurer reimbursements are funded by the same permanent appropriation that provides money for the tax credits, Collyer ruled since the ACA doesn’t explicitly make the connection, the cost-sharing payments have to be authorized by Congress.

“Such an appropriation cannot be inferred,” Collyer wrote. “None of Secretaries’ extra-textual arguments—whether based on economics, ‘unintended’ results or legislative history—is persuasive.”

In her decision, Collyer pointed out the administration requested an appropriation from Congress for the reimbursements in the budget for FY2014. The request was denied, but payments continued to be made through the tax credit appropriation.

The reimbursements will be allowed to continue for the time being, as Collyer stayed her decision pending an appeal.

“This is not the first time that we've seen opponents of the Affordable Care Act go through the motions to try to win this political fight in the court system," said White House Press Secretary Josh Earnest, according to the Hill.  

A study by Linda Blumberg and Matthew Buettgens of the Urban Institute said if cost-sharing reductions were struck down, insurers would respond by increasing premiums for silver plans for a 40-year-old on the ACA marketplaces by an average of $1,000 per year. In the long-term, the study predicted such a change could adversely affect insurers’ confidence in the exchanges.