The sun rises and sets. We all die. We all pay taxes. And, with a now seemingly equal degree of certainty, Republicans will always come up with new legal attacks on the Affordable Care Act.
On Thursday, one of those attacks paid off — at least for the time being. Judge Rosemary Collyer, a George W. Bush-appointee to a federal trial court in Washington, DC, effectively cut off federal payments intended to reimburse health insurance companies for reducing deductibles, co-pays and other expenses imposed on consumers. Though there is a great deal of uncertainty about what the implications of Collyer’s decision will be if it is ultimately upheld by higher courts, it could potentially impose significant new costs on many consumers.
“Authorization” and “Appropriation”
The Affordable Care Act includes two related provisions intended to reduce health costs for low-to-middle income consumers in the individual health care market. The first, which has already been the subject of considerable litigation, provides tax credits to individuals who qualify on the basis of income that helps them pay for insurance. The second requires insurers to “reduce cost-sharing” (a term that includes deductibles, co-pays and similar expenses), while also providing that the federal government “shall make periodic and timely payments to the issuer equal to the value of the reductions.”
The issue in United States House of Representatives v. Burwell, a case brought by the GOP-controlled House, is whether a distinction between how Obamacare treats these two payments prevents the reimbursements to compensate insurers for reduced cost-sharing from actually being paid. While the House concedes that the law includes a “permanent appropriation” for the tax credits, they argue that the cost-sharing reimbursements require additional money to be appropriated by Congress or else the reimbursements may not be paid. In legal terms, Collyer writes in her opinion, Congress “authorized” the reimbursements but did not “appropriate for it.”
Collyer’s opinion offers a fairly meticulous and, at many points, persuasive tour through various provisions of the Affordable Care Act, the tax code, and principles of appropriations law. Though the Justice Department argued that the two kinds of payments are “economically and programmatically integrated,” and thus the law should be read to permit both of them to be paid out, Collyer disagrees. “An appropriation cannot be inferred,” she writes, “no matter how programmatically aligned” the government may view the two sets of payments.
The Weak Point
The weakest part of Collyer’s decision, however, was handed down more than eight months ago. Recall that the plaintiff in his case is the U.S. House. Generally, lawmakers are not allowed to sue the executive because they disagree with how the administration is implementing a law. The House says that current law provides no permanent appropriation for the reimbursements. The Obama administration disagrees. Ordinarily, Courts are not supposed to intervene in these sorts of disputes. As Collyer herself acknowledged in a September opinion, “courts have guarded against ‘the specter of ‘general legislative standing’ based upon claims that the Executive Branch is misinterpreting a statute or the Constitution.’”
Collyer’s September opinion, however tried to dodge this general legal rule by converting an ordinary dispute about the proper interpretation of federal law into a constitutional case. As ThinkProgress explained at the time, Collyer performed this dodge by relying on “a novel distinction establishing a novel limitation to a novel rule that carves out a novel exception to decades of established precedent.” We summarized her argument as follows:
“The Congress (of which the House and Senate are equal) is the only body empowered by the Constitution to adopt laws directing monies to be spent from the U.S. Treasury,” Collyer writes. Thus, if the administration is, in fact, acting outside the terms of a statutory appropriation, that becomes a constitutional violation because only the Congress can decide the perimeters of federal spending. The House’s legal theory, Collyer claims, “does not turn on the implementation, interpretation, or execution” of a federal law. Rather, “the question presented is instead constitutional,” and this, she holds, is reason to allow the House’s suit to move forward.
Collyer’s opinion takes an even more confusing turn, however, when she later explains that not all constitutional claims fit within her newly created rule. In essence, she limits her rule to legal challenges involving appropriations, and dismisses several other claims which allege that the Obama administration is violating some other provision of law. “If the invocation of Article I’s general grant of legislative authority to Congress were enough to turn every instance of the Executive’s statutory non-compliance into a constitutional violation,” Collyer writes, “there would not be decades of precedent for the proposition that Congress lacks standing to affect the implementation of federal law.” By contrast, “when the appropriations process is itself circumvented, Congress finds itself deprived of its constitutional role and injured in a more particular and concrete way.”
This is arcane and confusing stuff, but, in essence, Collyer created a new exception to the rule against legislatures suing the executive for when those lawmakers sue over money. Trial judges who blaze new paths into virgin territory often find that their journey ends in reversal by a higher court. And, indeed, that appears to be the most likely outcome here. Collyer’s opinion will appeal to the United States Court of Appeals for the District of Columbia Circuit, a court with a Democratic majority. After the death of Justice Antonin Scalia, moreover, the Supreme Court’s conservative bloc no longer enjoys a majority.
And that’s assuming that every judge to hear this case votes along party lines. It’s far but certain that will be the case. Shortly after Collyer’s novel opinion on the right of legislative bodies to sue the executive, Jonathan Adler, a conservative law professor with his own history of backing litigation seeking to gut Obamacare, predicted that the House would lose its case 7–2 if it went to the Supreme Court, with Scalia in the majority.
What Does It All Mean?
And even if the House does prevail, it’s unclear what that means. While House v. Burwell does not present the same existential threat to Obamacare as two previous rounds of cases attacking the law in the Supreme Court, a brief by the Urban Institute claims that a loss in House could cost the federal government an additional $47 billion over ten years, because such a loss would cause insurers to increase premiums, which would in turn increase the amount of tax credits paid out to consumers. Consumers who did not qualify for subsidies, meanwhile, would have to pay those higher premiums out of pocket.
At the same time, however, there is a strong argument that the insurers could still receive the reimbursements if they bring a separate suit in the Court of Federal Claims — even if they can no longer receive them directly as the administration intends. If that turns out to be the case, House could create a great deal of administrative hassle, but fewer costs for consumers and the government.
Collyer, it is also worth noting, stayed her decision “pending any appeal by the parties,” so the reimbursements do not cut off immediately — and they may never cut off depending on how higher courts rule. At the very least, however, her decision injects new uncertainty into a health insurance market that is still adapting to the massive shifts in the policy landscape that have occurred in the last several years. That alone could wind up driving up costs to consumers, at least in the short term, as insurers hedge against the risk of losing the reimbursements in the future.