WASHINGTON—A federal district court held Thursday that the Obama administration’s payments to insurance companies under Obamacare are unconstitutional, since Congress has declined to pass spending bills funding those payments.
Section 1401 of the Affordable Care Act (ACA, or Obamacare) provides taxpayer subsidy payments to people buying insurance from an Obamacare exchange.
Although the ACA provides that such payments are for purchasing insurance from an “exchange established by a state,” the Supreme Court held in a 6-3 decision in King v. Burwell that “established by a state” also includes the federal government, in addition to states. The three conservative justices on the Supreme Court at the time (Antonin Scalia, Clarence Thomas, and Samuel Alito) sharply criticized that decision in an energetic dissent, but it remains the law today.
Section 1402 of the ACA reduces insurance deductibles and co-pays, forcing “cost sharing” by insurers. Instead of promising payments to working-income consumers, it promises direct payments to insurance companies. The Obama administration has spent billions of dollars in such payments, even though Congress has not passed laws appropriating the funds.
The U.S. House of Representatives filed suit in the U.S. District Court for the District of Columbia, represented by Professor Jonathan Turley from George Washington University. The House sued Health and Human Services Secretary Sylvia Burwell and Treasury Secretary Jack Lew, arguing that § 1401 and § 1402 of the ACA are not an automatic guaranteed payments — and, therefore, that these payments can only be made through Congress’s annual appropriations bills.
First, the Obama administration attempted to get the case dismissed, insisting that the House does not have standing to bring this matter into court at all.
Judge Rosemary Collyer sided with the House, holding that only Congress can decide to spend taxpayer money and that these Obama administration payments injure the House by seizing one of Congress’s constitutional powers. Speaking of the two houses of Congress, she began, “Only these two bodies, acting together, can pass laws—including the laws necessary to spend public money. In this respect, Article I [of the Constitution] is very clear: ‘No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.’”
That ruling is currently before the U.S. Court of Appeals for the District of Columbia Circuit.
Having held that the House has standing, the court today turned to the merits of the case. Collyer held that § 1401 of the ACA is a permanent (or “continuing”) appropriation of funds by Congress, but that § 1402 is not.
An appropriation must be expressly stated; it cannot be inferred or implied. It is well established that “a direction to pay without a designation of the source of funds is not an appropriation.” The inverse is also true: the designation of a source, without a specific direction to pay, is not an appropriation. Both are required.
There is no such clear spending language in § 1402. Therefore, the district court concluded that the Obama administration’s payments made without annual congressional spending bills for those funds violates Article I, § 9, clause 7 of the Constitution.
Without this diversion of taxpayer funds to insurance companies, individual Americans’ insurance premiums can skyrocket.
This ruling will now be stayed—and thus the administration’s payments will continue—while this case is appealed to the D.C. Circuit. From there, it is likely to go to the Supreme Court.
The case is U.S. House of Representatives v. Burwell.