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The latest anti-Obamacare lawsuit, and why it might succeed, explained

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A recent Supreme Court ruling may have breathed new life into congressional Republicans' anti-Obamacare lawsuit — one that is a bigger threat to Obamacare than it's gotten credit for.

Last November, House Republicans filed a lawsuit arguing that the White House had broken the law by giving insurance companies money that Congress hadn't authorized.

The problem for the lawsuit was that Congress has to prove it suffered damage from the White House's actions. As Andrew Prokop wrote, "The vast majority of lawsuits brought by members of Congress against the president on policy issues have been dismissed for lack of standing."

But as David Savage reports for the Los Angeles Times, a Supreme Court decision this spring could strengthen these legislators' arguments:

In late June, the high court gave the House lawsuit an apparent boost when it ruled the Arizona Legislature had standing to sue in federal court to defend its power to draw election districts. Although the Arizona lawmakers lost their case, Justice Ruth Bader Ginsburg said the Legislature could sue because it was an "institutional plaintiff asserting an institutional injury."

That is exactly what House Republicans claim in their lawsuit. They say they are defending their institutional authority to appropriate money.

The Obamacare lawsuit is still a far ways from the Supreme Court. It's currently sitting with the federal district court in Washington, DC, which Savage expects to decide soon whether it will dismiss the case. And even if that court finds that Congress has standing, it would still need to rule on the merits of the case — whether the Obama administration has broken any laws.

But if it does, the decision would have sweeping implications, significantly reshape the relationship between the executive and legislature — and strike a significant blow to the exact type of people Obamacare was meant to help.

Cost-sharing subsidies, explained

The main way Obamacare helps people buy insurance is with subsidies that cover some portion of their monthly premium. But there's also a lesser-known program that helps low-income Obamacare enrollees pay for other insurance costs, like co-pays and deductibles.

These are called cost-sharing subsidies, and they're what the new Republican lawsuit challenges.

Obamacare enrollees who earn between 100 and 250 percent of the federal poverty line ($29,425 for an individual; $60,625 for a family of four) qualify for cost-sharing subsidies. About 65 percent of Obamacare enrollees fall into that category, according to research firm Avalere Health — and 5.9 million people currently use them.

(Avalere Health)

The cost-sharing subsidies reduce enrollees' costs in two ways. First, people with cost-sharing subsidies get lower limits on their out-of-pocket maximums. The limit is on a sliding scale by income, and you can see how the cost-sharing limit goes up with income in this chart from the Kaiser Family Foundation:

(Kaiser Family Foundation)

Look at the second row, which covers people earning just above the poverty line: Their maximum out-of-pocket spending is $2,250 for an individual or $4,500 for a family. That's way lower than the limit for higher-income enrollees, the people in the last row of the chart.

Second, Obamacare requires insurance plans to craft different coverage plans for people buying with cost-sharing subsidies. These plans must cover a bigger chunk of an average enrollee's bills and usually do this with lower deductibles and co-payments.

The average Obamacare plan for someone without a cost-sharing subsidy, for example, charges $318 for an emergency room visit. But for the lowest-earning Obamacare enrollees who do get cost-sharing subsidies (the people who earn between 100 and 150 percent of the poverty line), that drops to $168.

(Kaiser Family Foundation)

The same is true for deductibles.

(Kaiser Family Foundation)

Deductibles for people receiving the biggest cost-sharing subsidies are about one-tenth the size of those getting no help at all.

House Republicans argue Treasury is sending out these subsidies illegally

While the Affordable Care Act authorized these cost-sharing subsidies when it was passed in 2010, the House lawsuit says it never appropriated the necessary funding to be sent over to Health and Human Services. Here's the relevant bit of the lawsuit on this issue:

Congress has not appropriated any funds for Section 1402 Offset Program payments to Insurers for Fiscal Years 2014 or 2015.

Notwithstanding the lack of any congressional appropriation for Section 1402 Offset Program payments, defendants Lew and the Treasury Department, at the direction of defendants Burwell and HHS, began making Section 1402 Offset Program payments to Insurers in January 2014, and, upon information and belief, continues to make such payments.

The Office of Management and Budget ("OMB") has reported that Section 1402 Offset Program payments to Insurers for Fiscal Year 2014 were estimated to be $3.978 billion.

Later, the lawsuit argues that "the House has been injured, and will continue to be injured, by the unconstitutional actions of defendants Lew ... which, among other things, usurp the House's legislative authority."

How much would it hurt Obamacare to lose cost-sharing subsidies?

The cost-sharing subsidies aren't as crucial to the Affordable Care Act as something like the mandate to buy coverage — but they do matter, perhaps more than typically acknowledged.

Forty percent of Obamacare enrollees earn between 100 and 150 percent of the federal poverty line. These are the people who are getting the biggest cost-sharing subsidies — the ones who could, for example, see their deductible jump from $229 to $2,556 if that financial help went away. For an emergency room co-payment to just about double could make that care unaffordable for someone earning about $12,000 annually.

This is particularly true for sick Obamacare enrollees, since the financial help only kicks in when you actually see a doctor and have to make a co-payment. Ending cost-insurance subsidies could put coverage out of reach for the exact people Obamacare was meant to serve: low-income, sick Americans.

The elimination of cost-sharing subsidies probably wouldn't decimate Obamacare in the way that killing the mandate to purchase insurance would. Still, there are 5.9 million Obamacare enrollees who rely on that financial help, and they're some of the law's most vulnerable beneficiaries. They're the ones who really do have something at risk in this latest lawsuit.