An interesting development transpired Tuesday, February 21, 2017 in a case pending in Federal District Court in the District of Columbia that challenges subsidy payments from the Federal Treasury to support Obamacare.  The case was originally filed by House Republicans in 2014 challenging the constitutionality of the Obama administration’s authorization and payment of funds from the U.S. Treasury to subsidize insurance companies helping keep deductibles and other out of pocket costs low for low-income consumers.

In May of 2016, the District Court ruled that the subsidies required Congressional authorization and the administration violated the separation of powers clause of the Constitution when it directed the payment of the subsidy funds.  The District Court issued a stay against enforcement of its order invalidating the payments to permit the Obama administration to appeal the decision.  This is where the case sat when President Trump took the oath of office.

The positioning of this case changed in a very interesting way when President Trump was sworn into office in January.  At that time, President Trump was substituted as the defendant in the case.  This found the Trump administration as defendant in a case challenging the authority of his predecessor.  As defendant, the Trump administration could simply discontinue the payment of subsidies to insurers and the case would be over.  Stopping the subsidies would make the case moot.  Ending the subsidies would certainly seem to be consistent with the Trump administration’s desire to end Obamacare.  It would also seem to be consistent with the desire of House Republicans who brought the lawsuit to end the subsidies to start with. 

The impact of discontinuing the cost sharing payments would likely create additional uncertainty in the insurance markets and further destabilize the Obamacare program.  Some have gone so far as to suggest ending the multi-billion dollar subsidies would create chaos in the insurance market, sharply increase premiums, and result in the withdrawal by some insurers from the program.  Taking away the subsidies would certainly require insurance companies to absorb losses attributable to low income individuals.

On January 21, 2017, House Republicans and the Trump administration, who are now opposing parties in the lawsuit, filed a Joint Motion to delay a ruling in the case.  The purpose for making the joint motion was “to allow time for a resolution that would obviate the need for judicial determination” of the appeal.  The Joint Motion asks the court to extend the enforcement stay indefinitely.

From a legal standpoint, the positioning resulting from the change in President is very interesting.  I will leave it to the pundits to debate what this development means or potentially signals regarding the future of Obamacare.  It is clear that Republicans (President Trump and the House Republicans) share a common goal to repeal Obamacare, yet find themselves on opposite sides of a significant Obamacare case.  It is possible the parties did not want to be seen as the owner of additional chaos to likely result from a decision on the merits or from discontinuing the subsidies by Presidential decree.  It does seem unusual that House Republicans would draw back from the result they requested at the inception of the case right at the moment their objective can be easily obtained.  With Trump in office, the objectives of the Republican House would have been met by simply ending the subsidy payments.  This is completely within the power of President Trump.

Stay tuned.  This is bound to get even more interesting.

Source: Blue Ink Blog