The Obama administration suffered another legal judgment against the Affordable Care Act when a district court judge ruled that the government has wrongly spent billions of dollars to repay insurers for health insurance provided to certain low-income patients

Congress never appropriated the money for those payments and “no public money can be spent without [an appropriation],” Judge Rosemary M. Collyer of the U.S. District Court for the District of Columbia wrote in her May 12 opinion .

If the ruling stands, the reimbursements could end, making health insurance too expensive for the millions of low-income patients who benefit from the ACA’s cost-sharing subsides, according to Jay Mark Waxman , a Boston-based health law attorney.

“If premiums become too expensive, you have people pulling out, then you have the so-called death spiral,” Mr. Waxman said in an interview. “The law could remain intact, but you could end up with not having very many people taking advantage of the marketplace, particularly the Silver Plan.”

The case in question, U.S. House of Representatives v. Burwell, revolves around two sections of the ACA. Section 1401 provides tax credits to certain patients in order to make insurance premiums more affordable, while Section 1402 requires insurers to reduce copayments, deductibles, and other out-of-pocket costs for certain low-income patients. The health law requires the federal government to reimburse insurers for the cost of these two sections.

While the first section received funding through the congressional appropriations process, the second section did not. In January 2014, HHS started repaying repay cost-sharing subsidies to insurers using federal funds. The House sued, claiming that HHS is illegally spending monies that Congress never appropriated. HHS has argued that other statutory provisions of the ACA authorize expenditures for cost-sharing reimbursements.

Judge Collyer ruled in the House’s favor, writing that paying out reimbursements without an appropriation violates the Constitution.

House members praised the court decision, calling it a victory for “the rule of law and the American taxpayer.”

“We received vindication of what we have known for quite some time – that the administration does not have the authority to spend over $150 billion for payments to insurance companies without an appropriation from Congress,” House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) said in a statement . “The court’s message was clear: Complying with Article I of the Constitution is not optional for President Obama.”

White House Press Secretary Josh Earnest countered that the administration has seen its share of lawsuits over the ACA and that such legal challenges generally end in a government victory.

“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,” Mr. Earnest said during a press conference . “And it’s unfortunate that Republicans have resorted to a taxpayer-funded lawsuit to refight a political fight that they keep losing. They’ve been losing this fight for 6 years. And they’ll lose it again.”

It’s too early to predict how the legal case might be resolved, said Katherine Hempstead, who directs health insurance coverage for the Robert Wood Johnson Foundation.

“There’s a lot of potential endings that don’t lead to people losing their cost-sharing reductions,” Ms. Hempstead said in an interview. “There are a lot of twists and turns ahead, and the probability of people losing their reductions is remote.”

The House could lose the case on appeal, she said. Such a ruling could be made on the merits of the case or on procedural grounds. Whether the House has standing to sue HHS has been questioned as well, she noted. HHS continues to argue that the House has not established a concrete or imminent injury and therefore, the suit should be thrown out. In addition, some have suggested that the federal ruling could be interpreted as requiring Congress to appropriate money to pay for the cost-sharing reductions, she said.

The ultimate resolution could come from the U.S. Supreme Court, Mr. Waxman added. Another possibility is that the next administration will decline to pursue the case.

“Depending on the timing, it could just stop in the court of appeals,” he said. “The next administration could say, ‘We’re happy with where it is and not take it up. You don’t know what’s going to happen.”

Mr. Earnest said the U.S. Department of Justice is reviewing the ruling and will make an announcement about the next step after the analysis.

On Twitter @legal_med


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