New hope for GOP after early win in ObamaCare lawsuit

The legal war over ObamaCare is back.  

A federal judge gave House Republicans a significant victory on Thursday when she ruled that the administration is illegally making certain ObamaCare payments without a congressional appropriation.

{mosads}Still, the case is far from over. Democrats are turning their attention to the appeal of the ruling, and experts say the case does not pose the same mortal threat to the healthcare law that previous challenges did.  

There is still 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.  

The ruling of Judge Rosemary Collyer, an appointee of President George W. Bush, was unprecedented in granting the House standing to sue. 

Nicholas Bagley, a law professor at the University of Michigan who frequently comments on ObamaCare cases, wrote in a blog post that he shared the judge’s skepticism of the administration’s arguments on the substance of the case.

“What I don’t share, though, is the district court’s confidence that she could properly hear this case,” Bagley wrote. “Until now, no one has thought that one house of Congress could file a federal lawsuit to hash out an appropriations dispute with the executive branch. This shouldn’t be the first time, even if the administration broke the law.”

He predicted that the court of appeals would have “little patience” for the idea that the House has standing to sue. 

Timothy Jost, a law professor at Washington and Lee University who supports ObamaCare, likewise noted that if the court of appeals ruled the House has standing it would open the floodgates so that “you’re just going to have the courts doing nothing but refereeing disputes between Congress and the administration.”

If House Republicans do end up winning, which likely won’t be known until next year, it would certainly be a shock to the healthcare system, though experts say President Obama’s law would not be crippled. 

“It isn’t the same order of magnitude,” as previous cases like King v. Burwell that nearly derailed ObamaCare, said Linda Blumberg, a senior fellow in the Health Policy Center at the Urban Institute. “It’s something that we should take seriously but it isn’t something that’s going to lead to a collapse.”

The case challenges ObamaCare’s “cost sharing reductions,” which are payments to insurers to reimburse them for lowering out-of-pocket costs like deductibles for low income people on ObamaCare plans. The judge ruled that the administration is illegally making those payments without an appropriation from Congress. 

If that ruling is upheld, insurers will still have to lower the costs for low-income people, they will just no longer be reimbursed. Therefore, experts say insurers will have to hike premiums to make up for the lost revenue. 

However, due to the way ObamaCare is structured, the law’s financial assistance will rise along with the hike in premiums. 

That increase in financial assistance would actually help insure more people, and an Urban Institute study, authored in part by Blumberg, found that a Republican victory in the case would actually increase the number of people with healthcare coverage by 400,000 people.  

The main loser, the study found, would not be consumers, but the federal government, which would have to pay out $47 billion more in financial assistance over 10 years. 

“I don’t think the House was interested in increasing [spending] on the program, which it would end up doing,” Blumberg said. 

Insurance companies, many of which are already struggling to adapt to the new system created by ObamaCare, face uncertainty over the ongoing litigation and whether the payments to them will end up being cut off.  

While the Urban Institute’s modeling found that the system could adapt, Blumberg noted that there is always uncertainty about how a ruling for Republicans would play out in real life. Some insurers could simply get fed up with the seemingly never-ending litigation and uncertainty around ObamaCare and drop out of the marketplaces altogether.  

“Whenever you put a monkey wrench in the middle of an operating market, you’re not quite sure how all the actors are going to behave,” Blumberg said. 

Republicans say the case is about the rule of law.

“The court ruled that the administration overreached by spending taxpayer money without approval from the people’s representatives,” Speaker Paul Ryan (R-Wis.) said in a statement. “Here, the executive branch is being held accountable to We the People, and that’s why this decision is very good news.”