Experts divided on threat from latest ACA legal challenge

House Republicans and the Obama administration are now sure to spend the coming months locked in yet another legal battle over the Affordable Care Act.

In a move that surprised some legal experts, U.S. District Judge Rosemary Collyer in Washington, D.C., decided last week that House Republicans have standing to sue over their allegation that the administration is illegally spending money that Congress never appropriated for the law's cost-sharing provisions. Those provisions include reduced deductibles, copays and coinsurance for many beneficiaries based on income.

The boost granted to this latest legal attack on the ACA means more uncertainty for the healthcare industry just months after the U.S. Supreme Court resolved King v. Burwell, a case many feared would throw the insurance market into disarray if the White House lost (the court ruled 6-3 in its favor). But experts disagree on the gravity of the threat from the House lawsuit. Some believe a ruling against the administration could similarly undermine insurance markets, but others say the possible impact is less significant.

“What you have is a fight over appropriations that could throw sand into the gears of the ACA,” said Nicholas Bagley, an assistant law professor at the University of Michigan. “Unlike King, this isn't a case that threatens the ACA going forward.”

To get this far, the House had to prove it was injured by the administration's actions. Collyer, nominated by President George W. Bush, concluded that the House had indeed been injured if its allegation regarding appropriations was true. The House cannot fulfill its constitutional role, she wrote, if it refuses to fund something and then the president funds it anyway.

The Obama administration said the fight is essentially a political one and argued in court documents that a “generalized grievance—a plaintiff's mere interest in vindicating its views regarding the proper implementation of the law—cannot suffice” as an injury.

The U.S. Justice Department has pledged to appeal the decision. Many experts have speculated that the administration will seek what's called an interlocutory appeal, which would allow a higher court to consider the standing issue before the lower court decides the case. Both Collyer and the appeals court would have to approve such a request.

About 56% of Americans who receive coverage through the ACA's insurance exchanges—approximately 5.6 million people—get cost-sharing assistance, according to the CMS.

Michael Cannon of the libertarian Cato Institute said the loss of cost-sharing reductions would cause exchange premiums to rise because healthy people would drop out.

Tim Jost, a law professor at Washington and Lee University who supports the ACA, said the lawsuit could have significant consequences. Or Congress just might have to appropriate money for the reductions, he said.

Bagley said insurers may have to go to the U.S. Court of Federal Claims if Congress still refuses to appropriate the money. But the question, he said, isn't whether the federal government will pay for cost-sharing reductions, but when and how.

Some legal experts say it's difficult to predict how the case will unfold because most similar questions haven't made it past the hurdle of establishing legal standing. “There are also interesting political considerations given that the Supreme Court has heard two challenges to Obamacare,” said Kermit Roosevelt, a University of Pennsylvania constitutional law expert. “I wonder how much appetite (the justices) have for more of them.”