The federal courts have become the last line of defense against President Obama’s war on the rule of law, occasionally thwarting his efforts to bypass the Constitution. And the judiciary just slapped Obama down again.
This time, it had to do with the Affordable Care Act’s subsidies to health insurers.
Generally speaking, people whose income is between 100 percent and 250 percent of the Federal Poverty Level—i.e.,between $24,250 and $60,625 for a family of four—who are enrolled in a Silver-level plan through an Obamacare exchange are eligible for cost-sharing reductions, in addition to federal subsidies. That means lower copays and deductibles, with the health insurers temporarily covering the losses.
Obamacare authorizes the Department of Health and Human Services (HHS) to compensate health insurers for the value of those cost-sharing reductions. However, the law does not provide funding for those payments, and Congress has never approved that money separately.
Normally, Congress would simply pass a law funding the provision. The Obama administration asked it to do just that in 2013.
But there is zero chance a Republican-led Congress will provide a health insurer bailout, when no Republican voted for the law, and Democrats sneered at them as Nancy Pelosi and Harry Reid rammed it through.
So instead, HHS shuffled money from other projects and handed it over to the health insurers beginning in January 2014. Those unlawful payments, if continued, would amount to about $150 billion over 10 years, according to the Congressional Budget Office.
Republicans in the House sued to stop the unilateral action and now a federal judge has agreed. U.S. District Court Judge Rosemary M. Collyer, a George W. Bush appointee, wrote, “Congress is the only source for such an appropriation, and no public money can be spent without one.”
Hey, somebody in Washington has read the Constitution! You’d think our “constitutional scholar” in the White House would know that. I think he does; he just doesn’t care.
While the ruling is a constitutional challenge to Obamacare, it likely won’t be the death knell for the law, as would have been NFIB v. Sebelius, which challenged the individual mandate.
Still, a number of news stories are claiming the judge’s verdict will hurt lower-income people who have benefited from the reduced cost sharing. Wrong!
By law, health insurers must still provide the cost-sharing breaks; they just won’t receive their federal reimbursements until the situation is resolved—if it ever is. So it is the insurers that are financially harmed by the decision, not low- and middle-income families.
While Judge Collyer stayed her ruling pending an appeal, one has to wonder how long health insurers can continue to provide the cost-sharing discounts unreimbursed. Several insurers selling through the exchanges are already bleeding billions of dollars in losses and some are dropping out.
And they face even greater financial woes. Legislation pushed through by Senator Marco Rubio killed funding for “risk corridors,” a bailout for health insurers that claimed excessive losses. Thus, the Centers for Medicare and Medicaid Services (CMS) announced it would only be able to fund 12.6 percent of the $2.87 billion in risk-corridor funds health insurers requested for 2014.
Without these subsidies, health insurers will likely have to raise premiums even higher come the fall, or cancel their policies and pull out of Obamacare—right before the November election.
However, the solution to this problem isn’t throwing more money into the black hole of Obamacare. It’s repealing and replacing it with something that will actually increase access to health care, lower the cost, and improve quality—all things Obama said his law would achieve but hasn’t.