A federal district judge in Washington, D.C., ruled Thursday the Obama administration had improperly funded a major subsidy of the Affordable Care Act, dealing a surprise blow to President Obama’s signature legislative achievement.
At issue in the case, House of Representatives v. Burwell, is Section 1402 of the ACA, which requires insurance companies in the ACA’s exchanges to reduce co-payments and deductibles in their plans. The reductions effectively shift those costs from the customer to the insurer.
Section 1402 then allows the federal government to provide “periodic and timely” reimbursements to insurers “equal to the value of the reductions,” thereby shifting the costs from the insurer to the federal government itself.
When Congress passed the act, however, it did not explicitly appropriate funds for those reimbursements. The Obama administration implemented it by drawing upon funds appropriated for Section 1401, which subsidizes health insurance for low-income taxpayers through a tax credit.
In its lawsuit, the House argued Section 1402 could not be funded through Section 1401’s tax credit. Obama administration officials countered that context and legislative history justifies their implementation of it, and that it made no logical sense for Congress to draft the provision without implicitly authorizing funds for it. Judge Rosemary Collyer in the U.S. District Court for the District of Columbia sided with the legislators.