District Court Judge Strikes Down Key Obamacare Provision

Date: May 17, 2016

Insurance Subsidy Case Likely To See Appeal, May Be Determined By Supreme Court

Small businesses and others looking for a reprieve from the mounting healthcare costs that have come as the result of Obamacare have a reason for some optimism, as a key provision of the healthcare law has been overturned in Federal District Court. In her ruling in the case House of Representatives v Burwell, the New York Times reported that Federal District Court Judge Rosemary M. Collyer has handed “a significant victory” to the House of Representatives by ruling that the Department of Health and Human Services “did not have the authority to spend billions of dollars on a key program under” Obamacare. The GOP-led House had sued the Obama Administration, challenging its “funding of a program to help lower-income people pay deductibles, co-payments and other out-of-pocket expenses under” the healthcare law. Collyer said Congress had not provided explicit authority for HHS to spend the funds. She stated in her opinion, “Such an appropriation cannot be inferred.” Forbes reported that in making her ruling, Collyer “rejected the idea she’d be responsible for disrupting healthcare markets with her decision.” Administration officials had recommended that the law “be interpreted to consider two separate subsidies – tax credits to defray the cost of insurance premiums, and payments to insurers to reduce co-payments and deductions – as part of an ‘integrated system of subsidies.’” They argued, “To do otherwise would risk a ‘cascading series of nonsensical and undesirable results,’” but Collyer disagreed. The National Law Journal reported that Collyer further explained that “federal agencies could not fund” Obamacare insurance subsidies “through another section of…law,” Section 1402, “that allocated money for tax credits.” Collyer wrote, “Paying out Section 1402 reimbursements without an appropriation thus violates the Constitution. … Congress authorized reduced cost sharing but did not appropriate monies for it, in the FY 2014 budget or since. Congress is the only source for such an appropriation, and no public money can be spent without one.”

What Happens Next

Judge Collyer’s ruling doesn’t end the case. As the Washington Post reported, Collyer stayed her ruling, meaning it will not take effect immediately, pending an appeal, which the Administration will undoubtedly file. The case may wind up before the Supreme Court before reaching a final conclusion. Alternatively, as The Hill reported, there remains “a strong possibility that the Court of Appeals will dismiss the case based on a lack of legal standing, meaning that the House does not have the right to sue the president over the interpretation of a law in the first place.” For the time being, Obamacare’s provisions remain intact.

What This Means For Small Businesses

Small businesses have seen healthcare costs continue to rise under Obamacare. The latest Federal court ruling, though not one that immediately reverses some of the negative effects of Obamacare, may be an indication that the tide is turning against this burdensome healthcare mandate.

Additional Reading

The Atlantic, Fox Business, Bloomberg News, Vox, the AP, the National Journal, and Politico were among the additional outlets covering Judge Collyer’s ruling.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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