ObamaCare and the Courts

Hold on to your wallets, America: It’s ObamacCare’s open-enrollment season, and health insurance costs continue to go up across the board for consumers in nearly every part of the nation.

According to a report by CNBC, cost increases are expected to be particularly painful for those bargain shoppers looking to pay as little as possible on premiums by purchasing a bronze plan – the cheapest health plans offered in the health insurance exchange. A study by HealthPocket.com reveals average bronze plan premiums and deductions have risen by 11 percent from 2015.

Gold plan premiums also increased, by 8 percent, and the average lowest-priced silver plans -- the plan chosen by more than two-thirds of exchange customers for 2015 -- rose by a shocking 13 percent.

While Obamacare exchange shoppers across the country lament the ever-increasing costs associated with President Barack Obama’s signature law, lawyers are preparing to head back to federal court to challenge various aspects of the Affordable Care Act (ACA) or the Obama administration’s implementation of it.

The most highly anticipated case is U.S. House of Representatives v. Burwell. In November 2014, the House of Representatives, led by former House Speaker John Boehner (R-OH), filed suit against the U.S. Department of Health and Human Services (HHS), HHS Secretary Sylvia Burwell, and the U.S. Department of the Treasury.

The House claims that the Obama administration violated the Constitution by spending $3 billion on subsidies without approval from Congress, which has the authority under Article 1, Section 1 of the Constitution to control public spending at the federal level: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law …”

The $3 billion in question was requested by the Obama administration to pay back health insurance companies for costs they covered as part of ACA’s cost-sharing reduction (CSR) subsidy program. Cost-sharing reduction subsidies are meant to cover a significant portion of out-of-pocket costs for qualified individuals who buy a silver health insurance plan through a federal or state ObamaCare exchange and earn between 100 and 250 percent of the federal poverty line. There are three levels of CSR subsidies, which are applied based on income level.

According to Obamacare Facts, “CSR subsidies reduce your out-of-pocket expenses by raising the actuarial value of your plan (the average out-of-pocket costs an insurer pays on a plan). Specifically, they raise coinsurance, and lower copays, deductibles, and maximum out-of-pocket costs you will pay in a policy period. This means that some folks will not only qualify for lower premiums on a Silver plan via tax credits, but may also get the out-of-pocket costs similar to a Gold or Platinum plan.”

The Congressional Budget Office estimates CSR subsidies will cost taxpayers about $136 billion over the next decade.

Unlike the taxpayer subsidies offered directly to consumers through the exchange, CSR subsidies are initially covered by insurance companies, who are then reimbursed by the federal government. Taxpayer subsidies provided directly to Americans purchasing health insurance through the exchange are permanently appropriated under ACA, but the funds to cover CSR subsidies must be appropriated regularly by Congress, which could, without passing any new legislation, determine it no longer will appropriate funds for CSR subsidies.

For fiscal year 2014, HHS requested $4 billion to cover CSR subsidies and another $1.4 billion for the first quarter of fiscal year 2015. The Republican-led Congress refused to appropriate the funds, but the Obama administration made the payments anyway, causing Boehner and the House to sue.

The Obama administration objected to the suit on the grounds the House does not have standing, but in September 2015, U.S. District Court Judge Rosemary Collyer ruled in favor of the House, setting up another ObamaCare federal appellate court showdown in the coming months. If the courts back Collyer’s ruling, the merits of the case will likely reach the U.S. Supreme Court in 2016 or 2017, where the Obama administration’s power grab will again be on trial.

A second Obamacare case I’ve been watching closely in 2015 is Cutler v. U.S. Department of Health and Human Services. Jeffrey Cutler, the tax collector of East Lampeter Township, Pennsylvania, lost his health insurance policy in October 2013, along with countless other Americans, when he discovered his plan did not meet the minimum legal qualifications established by ACA. Cutler had enjoyed his plan since 2007, and he told Consumer Power Report he had no intention of changing it prior to it being canceled.

When reports began to surface in 2013 of all the people who had lost their health insurance plans, Obama announced a “transition policy” in November 2013 that would allow states to decide whether they would allow individuals with non-qualifying plans to keep their health insurance policies and for how long.

In Pennsylvania, the government allowed insurers to determine whether they would let their customers keep health insurance policies that did not meet ACA requirements. Cutler’s insurer decided to cancel his policy. Cutler sued in December 2013 on two grounds. First, he claimed Obama’s transition policy violated the equal protection guarantee of the Fifth Amendment because it allowed states to apply federal law in fundamentally different ways on a state-by-state basis. Second, Cutler, who is Jewish, argues the mandate to purchase health insurance violates his religious rights under the First Amendment and that the law is fundamentally unjust because it allows certain religious groups to obtain exemptions from the individual insurance mandate.

Cutler’s case was rejected in the D.C. Circuit Court because the court ruled he didn’t have standing. The case was appealed to the D.C. Court of Appeals, a notoriously liberal court, and it was thrown out again for lack of standing.

Despite the case’s previous legal troubles, the American Freedom Law Center (AFLC), led by highly respected constitutional attorneys David Yerushalmi and Robert J. Muise, says Cutler has a real opportunity to get his case to the U.S. Supreme Court. On November 12, 2015, AFLC filed its Supreme Court petition on Cutler’s behalf, and I’ve been told a response is expected by early January 2016.

The legal assault against ObamaCare continues, but regardless of the outcome of these important cases, there’s only one way to eliminate the program completely: Elect in 2016 a president and members of Congress who promise to repeal and replace Obamacare with reforms that will respect individual liberty, provide access to quality health care to everyone, and utilize, rather than attack, the power of the free market.

Justin Haskins (Jhaskins@heartland.org) is a pro-liberty writer and editor of The Heartland Institute’s Consumer Power Report.