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In a setback to President Barack Obama’s health care law, a federal judge ruled Thursday that the administration is unconstitutionally spending federal money to fund the measure without approval from Congress.
The ruling from U.S. District Judge Rosemary Collyer was a win for House Republicans who brought the politically charged legal challenge in an effort to undermine the law.
If the decision is upheld, it could roil the health care law’s insurance markets, which are still struggling for stability after three years.
Collyer said her ruling would be put on hold while it is appealed.
At issue is the $175 billion the government is paying to reimburse health insurers over a decade to reduce co-payments for lower-income people.
The House argues that Congress never specifically appropriated that money and has denied an administration request for it. It says the administration is spending the money anyway, exceeding its constitutional authority. The administration has said it can spend the money automatically because the law authorizes it.
House Republicans launched the lawsuit in 2014 over Democrats’ objections. The House had already voted dozens of times to repeal all or parts of the law Republicans call “Obamacare,” but those efforts went nowhere as they stalled in the Senate or faced a White House veto.
Instead, the House turned its focus to tying up money spent on the law. Republican House leaders asserted that the Obama administration couldn’t spend money that lawmakers refused to provide.
House Judiciary Committee Chairman Bob Goodlatte, R-Va., called the ruling “an important step toward restoring the separation of powers and stopping President Obama’s power grab.”
“The Constitution is also clear that Congress has the power of the purse. The president cannot spend Americans’ money on his own terms,” Goodlatte said.
The disputed subsidies help lower-earning people afford out-of-pocket costs such as annual insurance deductibles and co-payments when they visit doctors.
These subsidies, called “cost-sharing reductions” are separate from the financial aid provided under the law to help people pay their monthly premiums, which would not be affected. But that doesn’t make the cost-sharing subsidies any less important. Without them, millions of people may not be able to afford to use the health insurance that they have obtained through the law.
Under the law, insurers have to provide cost-sharing assistance to consumers who earn up to two-and-a-half times the federal poverty level, or $60,750 for a family of four.
The government is then required to reimburse insurers for the cost of the subsidies. The administration maintains that the law authorizes the government to provide the money automatically, without going back to Congress for approval each year.
But Collyer rejected that argument, saying appropriating the money is up to lawmakers. “That is Congress’ prerogative,” Collyer wrote. “The court cannot override it by rewriting” the law. Collyer was appointed to the court by President George W. Bush, a Republican.
If Congressional approval for the spending is required, Congress’ GOP majority can just shut it off. And if that happens, the administration says the only option insurers have would be to raise insurance premiums significantly.
However, companies might also decide to bail out of the health law markets altogether. Major insurers already are struggling to make money on the program.
The White House had earlier argued that the House had no legal authority to pursue its lawsuit, but Collyer rejected that argument and allowed it to proceed.
Former House Speaker John Boehner, who authorized the lawsuit, tweeted that the decision “is a victory for the American people, and for House Republicans, who have stood firm for the rule of law.”
The administration is expected to appeal Thursday’s ruling to the U.S. Court of Appeals for the District of Columbia Circuit.
In another case last year, the Supreme Court threw out a challenge to the law’s subsidies for premiums. However, the legal issues in that case were much different.
