Federal judge rules that HHS has been illegally subsidizing insurance companies.
Yesterday, U.S. District Judge Rosemary Collyer dealt the Obama administration an important defeat that will affect its ability to keep Obamacare afloat. The case, House of Representatives v. Burwell, involves reimbursements the Department of Health and Human Services (HHS) has been paying to insurers to keep out-of-pocket costs artificially low for patients with incomes up to 250 percent of the federal poverty line. Congress refused to appropriate the funds for this scheme, but HHS reimbursed the insurers anyway, whereupon the House sued the Obama administration. Judge Collyer ruled that the payment of such reimbursements without congressional authorization “violates the Constitution.”
Her ruling essentially holds that the Obama administration flouted the Constitution’s Appropriations Clause by spending funds that hadn’t been appropriated by the only branch of government with the power to authorize spending. The framers unambiguously vested the legislative branch with the “power of the purse,” and Judge Collyer was at pains to point that out in her ruling:
Congress is the only source for such an appropriation, and no public money can be spent without one. See U.S. Constitution, Art. I, § 9, cl. 7 (“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law …”).
Yet HHS has been drawing money from the Treasury and giving it to insurance companies.
This ruling threatens the “reform” law’s viability because most of the insurers selling coverage through its exchanges are losing their shirts. The highest profile example is United Healthcare, which lost $720 million on Obamacare in 2015 alone and has decided to pull out of all but a few of its “marketplaces.” Meanwhile, other big players like Humana, Anthem, and Aetna have also lost huge amounts of money on Obamacare. Thus, combined with a congressional measure preventing HHS from wantonly distributing insurer bailout money from federal coffers, yesterday’s ruling may well convince insurers that HHS cannot prop up their sagging bottom lines. This will accelerate the insurer exodus from Obamacare.
It will not, however, have an immediately noticeable effect. While Judge Collyer ruled against the Obama administration and enjoined “the use of unappropriated monies to fund reimbursements,” she also stayed her own injunction: “The Court will stay its injunction, however, pending appeal by either or both parties.” The Obama administration will certainly appeal this ruling. What happens after that will depend on whether the GOP can preserve its House majority in the upcoming election and who ends up as the new tenant of the White House. If the GOP remains in control of the House and Hillary Rodham Clinton becomes President, the case could conceivably wind up before the Supreme Court.
Not coincidentally, the arguments used by the Obama administration lawyers before Judge Collyer were reminiscent of those that were deployed in their last major performance for the Supreme Court — King v. Burwell. They claim that the law doesn’t actually mean what it says. The case involves Section 1402 of the law, which clearly requires funds used for the reimbursements in question to be appropriated by Congress on an annual basis. The Obama administration claims that Section 1402 funds should be automatically appropriated just as they are under section 1401, which provides for permanent funding for a completely different type of subsidy, and that the law’s actual verbiage is irrelevant.
Judge Collyer wasn’t buying:
Section 1401 provides tax credits to make insurance premiums more affordable, while Section 1402 reduces deductibles, co-pays, and other means of ‘cost sharing’ by insurers. Section 1401was funded by adding it to a preexisting list of permanently-appropriated tax credits and refunds. Section 1402 was not added to that list. The question is whether Section 1402 can nonetheless be funded through the same, permanent appropriation. It cannot.
The judge’s position is that the law says what it says and it cannot be reinterpreted by HHS bureaucrats because what it says is inconvenient. Sadly, as King v. Burwell demonstrated, this kind of straightforward reasoning doesn’t always prevail.
This is why the Obama administration is also using another argument that it managed to get away with in King v. Burwell: Implementation of the law as written produces “absurd” results. Judge Collyer provided this unambiguous response:
Section 1402 reimbursements must be funded annually. Far from absurd, that is a perfectly valid means of appropriation.… None of the Secretaries’ extra-textual arguments — whether based on economics, “unintended” results, or legislative history — is persuasive.
Like the late Antonin Scalia, Judge Collyer refuses to interpret an act of Congress according to specious claims concerning what its authors are alleged to have meant to say rather than what they actually wrote on paper.
From her perspective this was probably an easy call:
The Affordable Care Act unambiguously appropriates money for Section 1401 premium tax credits but not for Section 1402 reimbursements to insurers. Such an appropriation cannot be inferred.… Paying out Section 1402 reimbursements without an appropriation thus violates the Constitution.
She didn’t, however, address the larger question that always comes up sooner or later in any of the various and sundry Obamacare lawsuits: Does the word “constitutional” still mean anything?
Judge Rosemary Collyer/Wikimedia Commons