Obamacare subsides to continue while House v. Price remains in limbo

I recently posted about this pending Obamacare lawsuit in Obamacare: ‘The reports of my death are greatly exaggerated’:

[T]his bizarre lawsuit that could still blow up the ACA insurance markets:

A pending court case, House v. Price (née House v. Burwell — and so much turns on the name change), has given the administration a bomb it could use to blow up insurance markets across the country. At stake is the legality of the payments the federal government makes to insurance companies to help cover the medical expenses of low-income people.

Destroying those markets, however, carries huge political risks. Trump’s full-throated support for a reckless replacement bill has convinced millions of Americans that he’s intent on taking away their insurance. If their insurance does go away, they’ll probably blame him. It’s his presidency, and his problem.

By moving to defuse House v. Price, the Trump administration could signal that it means to make the best of Obamacare. At the same time, however, the case may represent the last best chance to rip the statute up from the roots. Skittish insurers are watching closely to see what the administration will do. Time is short: Insurers will have to decide very soon whether they want to participate on Obamacare’s exchanges in 2018.

The New York Times reports today, Trump Administration to Pay Health Law Subsidies Disputed by House:

The Trump administration says it is willing to continue paying subsidies to health insurance companies under the Affordable Care Act even though House Republicans say the payments are illegal because Congress never authorized them.

The statement sends a small but potentially significant signal to insurers, encouraging them to stay in the market.

The future of the payments has been in doubt because of a lawsuit filed in 2014 by House Republicans, who said the Obama administration was paying the subsidies illegally.

Without the subsidies, insurance markets could quickly unravel. Even more insurers could withdraw from the public marketplaces where more than 10 million Americans obtained coverage last year.

The Affordable Care Act requires insurers to reduce deductibles and other out-of-pocket costs for certain low-income consumers. The “cost-sharing” subsidies, which total $7 billion a year, compensate insurers for these discounts. Seven million people selecting marketplace plans for 2017 qualified for cost-sharing subsidies. They account for 58 percent of the people signing up for plans this year.

House Republicans sued the Obama administration, saying that the spending — in the absence of an appropriations law — was unconstitutional. A Federal District Court judge agreed and ordered a halt to the payments, but suspended her order to allow the government to appeal.

Democrats and consumer advocates say millions of people could lose coverage if the Trump White House reversed the position of the Obama administration, dropped the appeal and accepted the argument of House Republicans.

The Trump administration has not clearly indicated its position on the appeal. Asked to clarify, the Department of Health and Human Services sent a written statement on Monday: “The precedent is that while the lawsuit is being litigated, the cost-sharing subsidies will be funded. It would be fair for you to report that there has been no policy change in the current administration.”

Its offer to continue paying subsidies could help stabilize insurance markets and provide some assurance to health plans that are deciding now whether to participate in 2018. But the lawsuit still hovers like a menacing cloud over the insurance marketplaces. Many insurers, having lost hundreds of millions of dollars on Affordable Care Act business, have withdrawn or announced plans to do so, creating concern that people in some counties might not have health plan options next year.

Because of the uncertainty about the future of the Affordable Care Act and of the subsidies, insurers say they will demand higher premiums to compensate for the risk if they stay in the market next year.

In their recent bill to repeal major provisions of the Affordable Care Act, House Republicans hoped to eliminate the cost-sharing subsidies. The bill collapsed on the House floor on March 24, torpedoed by the most conservative House members and by some moderate Republicans. The White House and Republican leaders say they hope to revive it.

Two influential Republicans — Representatives Tom Cole of Oklahoma, the chairman of the Appropriations subcommittee responsible for health spending, and Greg Walden of Oregon, the chairman of the Energy and Commerce Committee — said Congress should appropriate money for the cost-sharing subsidies.

“I don’t think anybody wants to disrupt the markets more than they already are,” Mr. Cole said in an interview. “It’s a very unstable market.”

Asked if he thought Congress should provide the money, Mr. Cole said, “My personal opinion is yes.”

Likewise, Mr. Walden said last month, “I will do everything I can to make sure that the cost-sharing reduction payments get made.” That, he said, is “an obligation we have not only to the insurers,” but also to consumers, and “we cannot leave them high and dry.”

Whether Republicans could muster the votes for a bill to provide the money or whether they would just muddle through, continuing the subsidy payments while courts decide the issue, is unclear.

“If Obama’s appeal continues, then the payments continue,” Mr. Collins added. “But if President Trump or Attorney General Jeff Sessions were to decide not to continue the appeal, that’s a game changer.”

The House Democratic whip, Steny H. Hoyer of Maryland, said Republicans would be to blame if consumers suddenly lost the cost-sharing subsidies. But Republican leaders may be reluctant to drop the lawsuit, which they filed to vindicate Congress’s “power of the purse.”

The subsidies at issue in the court case are different from the tax credits that help consumers pay monthly premiums. Congress clearly authorized payment of the tax credits, out of a government account earmarked for tax refunds. But Judge Rosemary M. Collyer of United States District Court in Washington found that Congress had not provided money for the cost-sharing subsidies.

The Obama administration, recognizing this oversight, asked Congress to provide the money. When Congress failed to do so, the Obama administration decided that it did not need a separate appropriation to reimburse insurers.

Judge Collyer said that making the payments without an appropriation “violates the Constitution.”

Mr. Cole said he believed that the Trump administration and House Republicans could probably “find common ground” to continue the cost-sharing payments at least temporarily. But a settlement of the court case would not wipe out Judge Collyer’s decision that the House had a right to pursue its claims in court.

The Supreme Court has held that the losing party in a lawsuit cannot automatically wipe out an unfavorable court decision by settling the case after filing an appeal.

The Justice Department has strong institutional reasons for not wanting Judge Collyer’s decision to stand as precedent. Courts, it said, should not “open the floodgates” to lawsuits by Congress in what are essentially political disputes between the legislative and executive branches of the government.

The next status report to the Court in this case is due on May 22. Stay tuned.

1 thought on “Obamacare subsides to continue while House v. Price remains in limbo”

  1. Maybe those folks who voted against their own best interests, the Trump voters who love the ACA but hate Obamacare, will luck out and not learn a hard lesson about personality cults.

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