May 12, 2016

House GOP Wins Challenge Against Affordable Care Act

Holland & Knight Alert
Nicole M. Elliott

The Affordable Care Act (ACA) has withstood several constitutional challenges. Most well-remembered perhaps, is when, in 2012, the U.S. Supreme Court upheld the individual mandate, which requires individuals to have health coverage, have an exemption or pay a penalty. There continues, however, to be significant time and ink spent on challenging other parts of the law or on how the Obama Administration has chosen to implement the law.

On May 12, 2016, the Administration suffered a key ACA defeat in a decision on the merits by the U.S. District Court for the District of Columbia when the court enjoined any further payments to insurers for the ACA's cost-sharing reduction program. The Administration will undoubtedly appeal this decision, which will likely end up in yet another ACA case that needs to be heard by the U.S. Supreme Court.

Case Background

In November 2014, the Republican-controlled U.S. House of Representatives filed a lawsuit against the Administration alleging that it spent money without Congress' permission. By way of background, for individuals who sign up for health coverage at one of the Health Insurance Marketplaces, the ACA provides for cost-sharing reductions to reduce expenses that individuals would otherwise have to pay out of pocket, which includes deductibles and co-pays. The cost-sharing reductions – along with the subsidies that reduce an individual's premium costs – are designed to expand healthcare coverage by making insurance, and its utilization, more affordable.

The complaint alleged that, notwithstanding the fact that the cost-sharing reduction program was included in the law, the payments made to insurers for this program – estimated, as of January 2015, at more than $3.27 billion – were never appropriated by Congress. According to the allegations made by the House of Representatives, these payments were in violation of the U.S. Constitution and would cost American taxpayers a total of $175 billion over 10 years. During the court proceedings, the Administration was forced to admit that it had included $1.4 billion in its 2014 budget request to Congress for this program and that there has not been a statute appropriating new money for the program.    


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.

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