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May 14, 2016 01:00 AM

House GOP win on Obamacare lawsuit won't change much—for now

Lisa Schencker
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    White House Press Secretary Josh Earnest called it “unfortunate that Republicans have resorted to a taxpayer-funded lawsuit to refight a political fight that they keep losing.”

    A federal judge's decision that the Obama administration unconstitutionally spent money to pay for part of the Affordable Care Act may not disrupt health plans or beneficiaries right away. But the fresh uncertainty immediately delivered a blow to the share prices of hospitals and health insurers.

    House Republicans alleged in a lawsuit that the administration illegally spent money that Congress never appropriated for the ACA's cost-sharing provisions.

    Those provisions include reduced deductibles, copayments and coinsurance that many Americans receive, depending on their income, for health plans purchased through the ACA's insurance exchanges.

    About 56% of Americans who receive coverage through the exchanges—approximately 5.6 million people—had seen cost-sharing reductions as of June 2015, according to the CMS.

    U.S. District Court Judge Rosemary Collyer agreed with House Republicans last week, writing that appropriating the money without congressional approval violates the U.S. Constitution.

    “None of the (HHS) Secretary's extra-textual arguments—whether based on economics, 'unintended' results or legislative history—is persuasive,” wrote Collyer, who was appointed by President George W. Bush.

    The Justice Department confirmed late Friday that it would appeal the decision.

    “It's unfortunate that Republicans have resorted to a taxpayer-funded lawsuit to refight a political fight that they keep losing,” White House Press Secretary Josh Earnest told reporters. “They've been losing this fight for six years. And they'll lose it again.”

    MH Takeaways

    The ACA's insurance marketplaces, still struggling to become stable, are entering a new phase of uncertainty, as appeals and an array of the ruling's possible ramifications are sorted out.

    House Speaker Paul Ryan (R-Wis.) called the decision a “historic win for the Constitution and the American people” in a statement. He said the ruling holds the executive branch accountable to American citizens.

    Collyer stayed her decision pending an appeal, meaning it won't go into effect until after an appeals court decides the matter, which won't likely happen for some time. Conservatively, it could take as long as two years for the case to go before the U.S. Supreme Court, assuming the high court takes it up, said Josh Blackman, an associate professor at South Texas College of Law and adjunct scholar with the libertarian Cato Institute.

    Blackman added that much could happen in healthcare over the next two years, noting the upcoming presidential election. “This case is far from over,” he said.

    That means the decision won't likely affect insurance rate-setting or participation for 2017, said Tim Jost, a law professor at Washington and Lee University. The ruling does, however, inject some uncertainty into the healthcare environment.

    Shares for four of the nation's major insurers—Aetna, Anthem, Cigna Corp. and Humana—and hospital chains Community Health Systems, HCA and Tenet Healthcare Corp. all dropped last week.

    In the long run, it's not totally clear how much the ruling could damage the ACA if a federal appeals court and/or the U.S. Supreme Court were to uphold it.

    “The cost-sharing credits are an important funding mechanism, so if those payments are not available, I think that would have a very serious impact on the exchanges,” said Ankur Goel, former counsel to the U.S. Senate Judiciary Committee who is now a partner at McDermott Will & Emery.

    House Speaker Paul Ryan called the decision a “historic win for the Constitution and the American people” in a statement. He said the ruling holds the executive branch accountable to American citizens.

    What happens if the decision stands after the White House exhausts its appeals

  • The feds can't reimburse insurers for cost-sharing assistance without congressional appropriation.

  • Insurers might raise rates to compensate because the law still requires them to provide the assistance.

  • Higher premiums likely trigger higher tax credits to help people afford them.

  • Insurers could go to the U.S. Court of Federal Claims to try to get the money.

  • Congress, which might change hands after the election, could appropriate the money each year. But the annual uncertainty would complicate insurers' rate-setting.

    Source: Modern Healthcare reporting

  • It's also possible that the ruling may cause some consumers to worry about enrolling in plans offered through the exchanges, said Gary Claxton, vice president at the Kaiser Family Foundation. But he said the timing of the ruling—far ahead of open enrollment—means that such concerns likely won't be a problem.

    The administration could also ask insurers to reassure policyholders if consumer doubt becomes an issue.

    Kevin Lucia, a professor at Georgetown University's Center on Health Insurance Reforms, said the decision is unlikely to affect insurers much now. But, he said, if the case is still going through appeals as 2018 approaches, the uncertainty it would create could start factoring into insurers' business decisions, including whether to enter or exit the exchanges.

    Many experts, however, say the ruling would be unlikely to sink the law as a whole, and many doubt an appeals court would uphold Collyer's ruling.

    Jost, an ACA supporter, believes the appeals court will reverse Collyer's decision on standing. Goel said the appeals court will likely focus heavily on the question of whether it's appropriate for courts to get involved in disputes between a legislative body and the executive branch. Goel co-authored an amicus brief siding with the government in a previous case challenging the ACA, King v. Burwell.

    Collyer shocked many legal experts last year when she ruled that the House had standing to sue in the first place. Many have said precedent should have barred lawmakers from proceeding with lawsuits against the administration.

    Blackman said the standing issue is the most difficult part of the case for House Republicans. “Once you get to the merits, the government's in trouble,” he said.

    If Collyer's decision is upheld by higher courts, one of several outcomes is likely. One possibility is that insurers might raise their premiums if the government stops paying them for the cost-sharing reductions, which they still must offer under the law. That, in turn, would likely trigger an increase in the tax credits the government now allows Americans to help them afford their premiums. The Urban Institute has estimated that such a scenario would cost the government an additional $47 billion over 10 years.

    Another possibility if Congress won't make the appropriation is that insurers could seek relief in the U.S. Court of Federal Claims. Some experts say they might stand a decent chance of winning there.

    Even if Congress does start appropriating money to cover the cost-sharing payments each year, there could be other problems for insurers, Jost said.

    Insurers set annual rates before the appropriations process concludes, which means that insurers would have to set annual rates without knowing whether to expect the cost-sharing payments, he said.

    In her opinion, Collyer acknowledged all of those possibilities. But, she wrote, “These arguments all focus on the wrong consequences.” The consequence at issue, she concluded, is that if the government were to prevail, it would suggest that every permanently authorized benefit program must also include a permanent appropriation. Such an idea is at odds with the law, she wrote.

    Consequences such as higher premiums, more federal debt and decreased enrollment in the exchanges would result from Congress' refusal

    to appropriate money for cost-sharing, she wrote.

    “That is Congress' prerogative; the court cannot override it by rewriting” the law.

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