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There’s another Obamacare lawsuit — and it just won a big victory

Astrid Riecken/Getty Images

An Obamacare case cleared a key legal hurdle Wednesday, when a federal judge granted House Republicans what is known as "standing" to sue the Obama administration over one of the law's provisions.

House Speaker John Boehner (R-OH) filed a lawsuit last July contending that the White House had broken the law by giving insurance companies money that Congress hadn't authorized.

Many legal observers expected the lawsuit to fail on standing, predicting that Congress wouldn't be able to show a way in which the Obama administration had harmed legislators, a prerequisite for a court challenge.

But in a surprise ruling, the United States District Court for the District of Columbia allowed the new challenge — which takes aim at a subset of the health law's insurance subsidies — to proceed.

"The constitutional trespass alleged in this case would inflict a concrete, particular harm upon the House for which it has standing to seek redress in this Court," United States District Judge Rosemary Collyer writes in the opinion.

Her court still must rule on the merits of the case, whether the Obama administration has broken any laws.

But if it finds in the Republicans' favor, the decision would have sweeping implications, significantly reshaping the relationship between the executive and legislature and striking a significant blow against the people Obamacare was designed 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 copays 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 copayments.

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 [Treasury Secretary Jack] Lew ... which, among other things, usurp the House's legislative authority."

Other lawsuits from Congress didn't have standing — which makes this a surprise

Courts can only step in to adjudicate specific cases — cases where the plaintiff has experienced some harm caused by the defendant. Only then does that particular plaintiff have "standing" to sue in federal court — and only then does the court adjudicate the merits of the case. By contrast, if the court finds the plaintiff does not have standing, it dismisses the case without ruling on it.

Boehner's problem seemed to be that the vast majority of lawsuits brought by members of Congress against the president on policy issues have been dismissed for lack of standing. As Lyle Denniston of the National Constitution Center wrote, "Time after time, when members of Congress have sued in the courts, because the Executive Branch did something that they believe frustrated the will of Congress, they have been met at the door of the courthouse with a polite refusal to let them in." The courts also tend to be skeptical of these suits because Congress has constitutional means by which it can check the president's power on its own — by passing a new law, using the power of the purse to cut off funding, or through impeachment.

In recent decades, several members of Congress sued President Clinton over the short-lived line-item veto act, other members sued Clinton for an executive order establishing environmental protections for certain rivers, and in 2011 Rep. Dennis Kucinich (D) sued Obama for launching the military operation in Libya. All of these suits were dismissed due to lack of standing. In the line-item veto case, Raines v. Byrd, Chief Justice William Rehnquist wrote for a 7-2 Supreme Court majority: "Our standing inquiry has always been especially rigorous when reaching the merits of the dispute would force us to decide whether an action taken by one of the other two branches of the Federal Government was unconstitutional."

Why this time was different

The District court in this case went through the precedent and found that legislators here did have standing to sue. It rejected the precedent set in Raines as good guidelines for this case because "the plaintiff here is the House of Representatives, duly authorized to sue as an institution, not individual members as in Raines.

"The Congress is the only body empowered by the Constitution to adopt laws directing monies to be spent from the U.S. Treasury," the court found. "Yet this constitutional structure would collapse, and the role of the House would be meaningless, if the Executive could circumvent the appropriations process and spend funds however it pleases. If such actions are taken ... the House as an institution has standing to sue."

The district court's ruling is far from the final word: Whatever it finds on the eventual merits of the case, appeals courts above it will also need to make their own findings on the standing issue. They could break another way.

Nevertheless, this is a big win for Obamacare opponents — and suggests that we haven't seen the last of the Obamacare lawsuits yet.