WASHINGTON — In a setback to President Barack Obama’s health care law, a federal judge ruled Thursday that the administration is unconstitutionally spending federal money to fund the measure without approval from Congress.
The ruling Thursday from U.S. District Judge Rosemary Collyer is a win for House Republicans who brought the politically-charged legal challenge.
At stake is $175 billion the government is paying to reimburse health insurers over a decade to reduce co-payments for lower-income people.
The House argues that Congress never specifically appropriated that money and has denied an administration request for it, but that the administration is spending the money anyway.
Collyer issued an order stopping further reimbursements, but delayed its implementation while the case is appealed.
If the decision is upheld, it could roil the health care law’s insurance markets, which are still struggling for stability after three years.
The disputed subsidies help lower-earning people afford out-of-pocket costs such as annual insurance deductibles and co-payments when they visit doctors.
These subsidies, called “cost-sharing reductions” are separate from the financial aid provided under the law to help people pay their monthly premiums, which would not be affected. But that doesn’t make the cost-sharing subsidies any less important. Without them, millions of people may not be able to afford to use the health insurance that they have obtained through the law.
Under the law, insurers have to provide cost-sharing assistance to consumers who earn up to two-and-a-half times the federal poverty level, or $60,750 for a family of four.
The government is then required to reimburse insurers for the cost of the subsidies. The administration maintains that the law authorizes the government to provide the money automatically, without going back to Congress for approval each year.
But Collyer rejected that argument, saying appropriating the money is up to lawmakers. “That is Congress’ prerogative,” Collyer wrote. “The court cannot override it by rewriting” the law. Collyer was appointed to the court by President George W. Bush, a Republican.
If Congressional approval does become a requirement,the administration says the only option insurers have would be to raise insurance premiums significantly.
However, companies might also decide to bail out of the health law markets altogether. Major insurers already are struggling to make money on the program.
The administration is expected to appeal Thursday’s ruling to the U.S. Court of Appeals for the District of Columbia Circuit.
In another case last year, the Supreme Court threw out a challenge to the law’s subsidies for premiums. However, the legal issues in that case were much different.
