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Republican House members win Obamacare funding challenge

U.S. House of Represenatives v. Burwell, et al., (DC DC 5/12/2016), Civil Action No. 14-1967 (RMC)

U.S. House of Represenatives v. Burwell, et al.

A district court has granted summary judgment to the House of Representatives in their challenge to the funding of a provision in the Affordable Care Act (ACA). The court found that §1402 of the ACA impermissibly appropriated money for reimbursements to insurers in violation of Article I, §9, clause 7 of the Constitution, which requires that such monies be appropriated by Congress. The court enjoined any further reimbursements under §1402 until a valid appropriation was in place, but stayed its injunction pending an appeal by the parties.

Background. Article I of the Constitution states, in part: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” (U.S. Const. Art. I, §9, cl. 7).

§1401 of the ACA provides for Code Sec. 36B’s tax credits to make insurance premiums more affordable for low-income taxpayers. The ACA amended 31 U.S.C. § 1324(b) to provide a permanent appropriation for the premium tax credits under §1402. Specifically, the tax credits were permanently funded by adding a reference to Code Sec. 36B to 31 U.S.C. § 1324(b)(2).

§1402 of the ACA requires insurers offering qualified health plans through ACA Exchanges to reduce deductibles, coinsurance, copayments, and similar charges for eligible insured individuals enrolled in their plans. These reductions are referred to in the ACA as “cost-sharing reductions.”

As the district court noted, the insurers are supposed to get their money back. §1402(c)(3)(A) provides that “[a]n issuer of a qualified health plan making reductions under this subsection shall notify the Secretary [of Health and Human Services (HHS)] of such reductions and the Secretary shall make periodic and timely payments to the issuer equal to the value of the reductions.” However, nothing in §1402 prescribes a periodic and timely payment process. Nor does §1402 condition the insurers’ obligations to reduce cost sharing on the receipt of offsetting payments.

In short, §1401 was funded by adding it to a preexisting list of permanently appropriated tax credits and refunds, but §1402 was not added to that list.

Parties’ positions. The Obama Administration has interpreted the provision under §1402 of the ACA as a type of federal spending that does not have to be explicitly authorized by Congress. On the other hand, House of Representatives Republicans contend that the reimbursements to insurance companies must be funded and re-funded by annual, current appropriations.

Court’s conclusion. The court concluded that under §1402 of the ACA, unless the funds are appropriated by Congress, the Secretaries of HHS and the Treasury cannot spend funds in reimbursing insurance companies for reductions they are required to make to customers’ out-of-pocket medical payments.

The court ruled that the cost-sharing reductions weren’t funded through the same permanent appropriation that covers the premium tax credit under the ACA. The Court found that the ACA unambiguously appropriates money for the §1401 premium tax credits, but not for §1402 reimbursements to insurers. Further, such an appropriation cannot be inferred. None of Secretaries’ extra-textual arguments—whether based on economics, “unintended” results, or legislative history—were persuasive.

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