The Buzz

Obama Administration Defeated in Big Obamacare Case

A federal district court in Washington, D.C., ruled Thursday in favor of the U.S. House of Representatives’ challenge to the Obama administration’s implementation of part of the Patient Protection and Affordable Care Act, also known as Obamacare.

The act has been “revised” dozens of times by the administration since its passage in March 2010, leading the House to sue over the administration’s payment out of the U.S. Treasury of subsidies to insurance providers for providing cost-sharing reductions to certain policyholders, even though Congress explicitly refused to appropriate funds for these subsidies.

As D.C. District Court Judge Rosemary Collyer explained in an opinion last fall, Section 1402 of the law “requires insurers to reduce the cost of insurance to certain, eligible statutory beneficiaries,” and the “federal government then offsets the added costs to insurance companies by reimbursing them with funds from the Treasury.”

This section stated that cost-sharing offsets must be funded by annual appropriations. But the House has never appropriated funds for Section 1402, so it argued that the administration violated Article I, Section 9, Clause 7 of the Constitution, which provides that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

Funds Not Appropriated by Congress:

Collyer ruled last September that the House had standing to challenge the spending of funds not appropriated by Congress, and Thursday she decided the merits of that claim in a significant loss for the Obama administration.

In the opinion, Collyer goes through a detailed explanation of how the House appropriates moneys for the federal government, from permanent or continuing appropriations to current appropriations that must be reauthorized on an annual basis.

While Congress provided a permanent appropriation for Section 1401, which provides tax credits to individual taxpayers to make their insurance more affordable, Collyer concluded that Section 1402 lacked such an appropriation:

Paying out Section 1402 reimbursements without an appropriation thus violates the Constitution” because Congress “authorized reduced cost sharing but did not appropriate monies for it.

Reaction to the Government’s Argument:

Collyer calls the administration’s argument that Congress had appropriated the necessary funds “a most curious and convoluted argument whose mother was undoubtedly necessity.”

Collyer points to the budget request that the administration sent to Congress in 2013 that asked for an annual appropriation for the Section 1402 payments to insurers; thus the administration itself acknowledged that there was no permanent appropriation.

Furthermore, when the Senate Appropriations Committee adopted the appropriations bill for the Department of Health and Human Services and Obamacare in 2013, its accompanying report specifically said that it was not including the mandatory appropriation requested by the administration for Section 1402.

The administration argued that the permanent appropriation for the individual tax credits contained in Section 1401 also included Section 1402.

Hiding Elephants in Mouseholes:

In a funny comment on this claim, Collyer said that the administration was trying to “squeeze the elephant of Section 1402 reimbursements into the mousehole of Section 1401(d)(1).” However, she cited a Supreme Court decision in which the court said that Congress does not “hide elephants in mouseholes.”

The administration also claimed that the absence of language appropriating funds “means that Congress felt it unneeded, ostensibly because Section 1402 was already funded permanently.”

But Collyer explained that missing appropriations language in a statute does not allow courts or the administration “license to rewrite the plain text.” In fact, there is substantial case law establishing that an “appropriation must be expressly stated; it cannot be inferred or implied.”