Court Says Administration Violated Constitution in Funding Obamacare Subsidies

By Terence P. Jeffrey | May 12, 2016 | 3:56pm EDT
President Barack Obama and HHS Secretary Sylvia Burwell (Screen Capture)

( - Judge Rosemary Collyer of the U.S. District Court for the District of Columbia issued an opinion today declaring that the Obama administration violated the Constitution by funding Obamacare subsidies for which Congress did not appropriate funds.

“Congress passes all federal laws in this country,” the judge wrote in her opinion in the case of U.S. House of Representatives v. Burwell.

“The Court will enter judgment in favor of the House of Representatives and enjoin the use of unappropriated monies to fund reimbursements due to insurers under Section 1402,” the judge said.

The opinion discussed the distinction between Section 1401 of the Affordable Care Act and Section 1402. Section 1401 provided for refundable tax credits to help cover the premiums of people who purchase health insurance on the Obamacare exchanges and who have adjusted gross incomes between 100 percent and 400 percent of the poverty level. Section 1402 provides reimbursements to insurers for lowering the “cost sharing”—i.e. deductibles, co-pays—for people who qualify under the law for such subsidies.

However, as written the Obamacare law incorporated the Section 1401 tax credits into the Internal Revenue Code, which includes language permanently funding such credits.

“Put simply,” the judge said, “ACA tax credits to subsidize health insurance for eligible taxpayers are permanently funded via the reference to ‘36B’ in 31 U.S.C. 1324(b)(2).”

However, the law did not make the cost-sharing subsidies of Section 1402 part of the Internal Revenue Code, and did not otherwise approve permanent appropriations for them. “Section 1402 is codified not in the Internal Revenue Code, but in Title 42, which includes federal laws concerning ‘Public Health and Welfare,’” said Judge Collyer.

Therefore, for Obamacare’s Section 1402 cost-sharing subsidies to be funded, Congress must pass appropriations funding them.

“The only result of the ACA, however, is that the Section 1402 reimbursements must be funded annually,” said the judge. “Far from absurd, that is a perfectly valid means of appropriation.”

“The question is whether Congress appropriated the billions of dollars that the secretaries have spent since January 2014 on Section 1402 reimbursements,” the judge said.

They have not, she determined.

“Paying out Section 1402 reimbursements without an appropriation thus violates the Constitution,” the judge said. “Congress authorized reduced cost sharing but did not appropriate monies for it, in the FY 2014 budget or since.

“Congress is the only source for such an appropriation, and no public money can be spent without one,” the judge said. “See U.S. Constitution Art. I, Section 9, Clause 7 (‘No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law…’). The secretaries textual and contextual arguments fail.”

In the conclusion of her opinion, the judge said: "The Court will grant summary judgment to the House of Represenatatives and enter judgment in its favor. The Court will also enjoin any further reimbursements under Section 1402 until a valid appropriation is in place. However, the Court will stay its injunction pending any appeal by the parties."



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