ObamaCare has survived two high-profile trips to the Supreme Court largely unscathed, but a legal challenge that has so far attracted little attention poses a serious threat to the law.
The case — U.S. House of Representatives v. Burwell — involves a key feature of ObamaCare meant to make health insurance more affordable to low-income families.
Under the law, those with incomes below 250% of poverty get not only their premiums subsidized but also their copays and deductibles, thereby minimizing their out-of-pocket costs.
To the extent that anything works in ObamaCare, the “cost sharing” subsidies have at least proved popular. According to the Obama administration, 60% of those enrolled in an ObamaCare exchange received them last year.
The legal challenge involves how these subsidies — which will cost $130 billion over the next decade — are paid for.
Under the law, ObamaCare’s premium subsidies are an entitlement, which means that the money needed to pay for them is appropriated automatically.
But Republicans in the House say that Congress must appropriate the cost-sharing subsidies each year. And, as IBD has reported, a good case can be made that they are right.
When the Congressional Research Service looked into the matter, for example, it concluded that the premium subsidies “do not appear to be funded through a permanent appropriation.”
When Republicans refused to appropriate any money for the cost-sharing subsidies, the Obama administration simply decided that it would finance them without approval from Congress.
In other words, the case revolves around the separation of powers. The Constitution doesn’t allow the White House to spend money on everything it wants.
The Bush-appointed judge overseeing the case, Rosemary Collyer, is expected to issue her ruling soon. Should she side with the Republicans — and the Supreme Court upholds her ruling — the cost-sharing subsidies would disappear, unless the GOP decides to fund them (which, given their vow to repeal ObamaCare entirely, seems unlikely).
The problem for ObamaCare is that “a ruling that would block the federal subsidy payments would come on top of a number of other tough challenges insurers and the exchanges face in 2017,” according to the health business site Modern Healthcare.
Insurers are already talking about huge rate hikes for next year in the wake of substantial ongoing losses from their ObamaCare plans. Losing the cost-sharing subsidies would add yet another expense to the program, forcing insurers to raise the cost of their premiums even higher.
That, in turn, would encourage many low-income families to drop their insurance. Even if their subsidized premiums remained low, the high deductibles and copays that they’d suddenly face would still make health care unaffordable for many of them. One study found that a million people would probably drop their plans if the cost-sharing subsidy went away.
Given ObamaCare’s run of bad luck lately, it wouldn’t be surprising if Collyer sides with Republicans and ends ObamaCare’s winning streak in court.
