Obamacare subsidies were dealt a legal blow today by a judge appointed by the Bush Administration. U.S. District Court Judge Rosemary Collyer ruled that the subsidies, which she called “cost-sharing reduction payments” that are paid directly to insurers, cannot continue without a congressional appropriation.
[graphiq id=”15JJAB5pxC5″ title=”Percentage of People Eligible for an Obamacare Marketplace Plan Who Are Signed Up for 2016″ width=”600″ height=”620″ url=”https://w.graphiq.com/w/15JJAB5pxC5″ link=”http://affordable-care-act.healthgrove.com” link_text=”Percentage of People Eligible for an Obamacare Marketplace Plan Who Are Signed Up for 2016 | HealthGrove”]
Millions of Americans have come to depend on these subsidies to afford their insurance premiums. When you purchase health insurance on the exchange, if you meet certain income requirements, you automatically are entitled to subsidies from the federal government. Now, there are doubts as to whether this system can continue to function under its present arrangement. The Obama Administration has maintained that the Affordable Care Act created a perpetual appropriation for these subsidies, and will appeal this decision.
Up until this ruling, the Obama administration circumvented the traditional appropriations process for funding these subsidies, something that many Republicans on Capitol Hill have long believed is unconstitutional. This ruling confirms what many have suspected for quite some time — that administration’s tactics run afoul of our nation’s constitutional principles.
“The historic ruling reaffirms the foundational “power of the purse” that was given to the legislative branch by the Framers,” said Jonathan Turley, lead counsel for the United States House of Representatives in this case (United States House of Representatives v. Burwell). The ruling will not have an immediate effect, as the subsidies will be allowed to continue pending appeal.
Leaders on the right are claiming victory, even though ordinary Americans won’t see any changes in the near future. House Speaker Paul Ryan called the ruling “a historic win for the Constitution.”
RNC Chairman Reince Priebus called the ruling “another rebuke by the courts to a president who has routinely flouted the Constitution.” The Obama Administration and its supporters are expecting a win upon appeal.
Experts in the field of healthcare are mostly in agreement that this decision, even if it holds up after appeal, is not as potent of a threat to Obamacare as past challenges. The most often-cited study by the Urban Institute regarding changes to healthcare subsidies found that there would be some disruptions, but that those changes would not doom Obamacare to certain failure. In sum, there are several policy options at the administration’s disposal that could work around this ruling.
David is the Editor of Bold. He's especially passionate about millennial economic empowerment. A former local news reporter, David is originally from the Little Havana area in Miami, and later became a pioneer resident of the Disney-inspired town of Celebration, Florida. David holds a Master’s in Public Policy from the Harvard Kennedy School.