House v. Burwell and the Cost-Sharing Catastrophe

by Deborah Steinberg

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Before there was “Repeal and Replace,” there was House v. Burwell.[1] In 2014, the U.S. House of Representatives filed a lawsuit against the Democratic administration in the U.S. District Court for D.C. for allegedly failing to implement several provisions of the Affordable Care Act (ACA).[2] A simple majority of Republican Representatives passed a House Resolution giving Speaker Boehner the authority to sue the Executive Branch to commence the litigation,[3] which is currently on hold at the appellate level.[4] Rejecting the majority of the allegations, the district court ruled in favor of the House of Representatives on its claim that the Obama administration was unconstitutionally funding the ACA because the House never appropriated certain payments.[5] The Court critically erred both in granting standing to the House and in denying the administration’s motion for summary judgment, and in so doing violated judicial precedent and the Constitution.[6] Consequently, the House Republicans could prevent lower and middle-income Americans from obtaining their entitlements provided under the ACA.[7] The lawsuit demonstrates the Republican effort to sabotage the ACA without the fear of political accountability while simultaneously creating additional barriers to the accessibility of affordable healthcare.

Under the ACA, households with incomes below 400% of the Federal Poverty Level (FPL) receive financial assistance to help pay for their health insurance. People with incomes between 100-250% of the FPL are eligible for cost-sharing reductions (CSR), which helps them pay for co-pays and other out-of-pocket expenditures and elevates the quality of their coverage. Instead of directly lowering costs or giving money to the beneficiaries, the federal government funds CSRs by reimbursing insurers for reducing these out-of-pocket costs in their marketplace plans. [8] The ACA explicitly authorizes these payments and requires insurers to provide these subsidies, but the statute fails to specify how to fund the CSRs.[9] Because the statute does not apparently allocate the funding to insurers, the House Republicans argued that the Obama administration was unilaterally making an appropriation in violation of the separation of powers.

Since the enactment of the ACA, both Congress and the Administration have allocated the funding for CSRs each year alongside the Advance Premium Tax Credits (APTC), which similarly reimburse insurers for reducing the monthly insurance payments for households between 100-400% of the FPL.[10] Because both types of subsidies are reimbursed to insurers, provide the same function of reducing costs for lower and middle-income households, and are located in the same part of the statute, the Executive Branch argues that the funds are intended to be treated the same.[11] This interpretation is also consistent with the Supreme Court’s ruling on APTCs in King v. Burwell, in which the Court held that these payments must be provided in all marketplaces because they are integral to the overall functioning of the ACA.[12] The majority further articulated that provisions of the ACA should be read harmoniously and consistently, such that it can achieve the overall purpose of making healthcare accessible and affordable. Id. It would be inconsistent with the goal of the statute to fail to fund the cost-sharing reductions since health insurance would cease to be affordable for families below 250% of the poverty level. Moreover, insurers would be liable for somewhere between $5 and $9 billion for this year if Congress fails to reimburse them for the subsidies the law requires them to provide.[13] Because insurers do not know whether or not they will receive these reimbursements, many have chosen to increase premiums to make up for the uncertainty or even to exit the marketplace altogether. Id.

However, the Republican majority in the House of Representative argues that they are under no obligation to fund the CSRs, since there is no explicit allocation in the ACA.[14] Specifically, they note the contrasting language in the provision governing the APTCs, which explicitly provides for the reimbursements in the federal budget, and the subsequent silence in the CSR provision to suggest they intended to treat them differently. Id. While this argument is a legitimate interpretation of congressional silence, it disregards every other contextual statement, ignores legislative history, and relies on administrative history to come to this conclusion. For example, the initial complaint in House v. Burwell cites statements of administrators shortly after Congress passed the ACA to assert the administration knew CSRs required an annual allocation. Id. While legislative and even statutory history can be strong indications of intent in the presence of an ambiguous statute, the use of these statements cannot plausibly suggest the intent of a separate branch of the government, particularly when all subsequent actions followed the opposite interpretation.[15] Nonetheless, The House argues that the administration violated the Constitution by ignoring the separation of powers, disregarding the legislative process, and bypassing the Appropriations Clause.[16]

The argument is not only flawed, but inherently a contradiction of itself when taken in consideration of the House’s decision to resolve this disagreement through the Judicial Branch. Plaintiffs must suffer a concrete and discrete injury to bring a lawsuit in an Article III court.[17] The House claimed it was “injured, and will continue to be injured, by Defendants’ unconstitutional actions which, among other things, usurp the House’s legislative authority.”[18] This assertion lacks merit first and foremost because any legislative authority of the House of Representatives is bound to the Senate through the explicitly defined legislative procedure in the Constitution: bicameralism and presentment.[19] However, the Senate never even considered the House’s resolution to sue the Executive Branch, let alone consider this interpretation of the ACA.[20] Standing also requires that the plaintiffs exhaust all other remedies, yet the House never attempted to use any of its readily available and constitutionally allocated powers to resolve this dispute.[21] The failure to pass new legislation on the matter is especially pertinent since the House’s current interpretation contradicts all of their previous legislative actions, including allocating the CSR reimbursements every year since the ACA’s enactment.[22] It is also noteworthy that the House has subsequently chosen to hold the lawsuit at the appellate level with the injunction in place, thereby not implementing the decision of the district court, even though the new administration purports to agree with the House.[23]

In bringing this lawsuit, the House of Representatives violated the very provisions of the Constitution over which it sued the Executive Branch. In essence, the House was taking power away from the Senate, ignoring the legislative process by failing to go through bicameralism and presentment, and effectively granting the Judiciary the power to legislate and appropriate funds through judiciary review. See id. The District Court should never have granted standing under such a false pretense of authority, when the House clearly did not have a right of action or an injury in fact. On top of that, the district court asserted that it was permissible to resolve this issue through judicial review because there was no question of statutory interpretation.[24] Rather, looking at the ACA statute was “antecedent” to the constitutional question, even though looking at the statute was necessary to make a constitutional argument in the first place. Both the House and the court circumvented the Constitution and common law precedents by using judicial review to resolve a purely political disagreement between the Legislative and Executive Branches.[25] In doing so, they blatantly disregard the separation of powers and the safeguards of democracy at the expense of at least six million lower- and middle-income citizens.[26]

[1] This article primarily covers the lawsuit through the 2017 inauguration prior to its current incarnation as House v. Price, reflecting the change of the Secretary of Health and Human Services. See Kimberly Leonard, GOP Moves to Delay Obamacare Lawsuit, U.S. News & World Rep. (Feb. 21, 2017), https://www.usnews.com/news/health-care-news/articles/2017-02-21/in-house-v-price-gop-moves-to-delay-obamacare-undoing.

[2] Complaint, House v. Burwell, 130 F. Supp. 3d 53 (D.D.C. 2014) (No. 14-cv-01967), 2014 WL 6492097, at *3-4.

[3] H.R. Res. 676, 113th Cong. (2014) (enacted).

[4] See Timothy Jost, House seeks pause in cost-sharing reduction litigation (updated), Health Aff. (Nov. 22, 2016), http://healthaffairs.org/blog/2016/11/22/house-seeks-pause-in-cost-sharing-reduction-litigation/.

[5] Id.

[6] See Brief for Appellants at 14, House v. Burwell, No. 16-5202 (D.C. Cir. Oct. 24, 2016).

[7] See Linda J. Blumberg & Matthew Buettgens, The Implications of a Finding for the Plaintiffs in House v. Burwell, Urb. Inst., 1 (Jan. 2016), http://www.urban.org/sites/default/files/alfresco/publication-pdfs/2000590-The-Implications-of-a-Finding-for-the-Plaintiffs-in-House-v-Burwell.pdf.

[8] CSRs are not available for households below 100% of the Federal Poverty Level because the statute anticipated that all states would expand Medicaid to cover those individuals, but some states chose not to do so after the Supreme Court concluded this provision would be coercive for the states. See NFIB v. Sebelius, 132 S.Ct. 2566 (2012).

[9] See Complaint, supra note 1.

[10] See Brief for Appellants, supra note 5.

[11] Id.

[12] See King v. Burwell, 135 S.Ct. 2480 (2015).

[13] See Timothy Jost, The House and the ACA – A Lawsuit Over Cost-Sharing Reductions, New England J. of Med. (Jan. 2016), http://www.nejm.org/doi/full/10.1056/NEJMp1513600?af=R&rss=currentIssue&#t=article; see also Kimberly Leonard, GOP Moves to Delay Obamacare Lawsuit, U.S. News & World Report (Feb. 21, 2017), https://www.usnews.com/news/health-care-news/articles/2017-02-21/in-house-v-price-gop-moves-to-delay-obamacare-undoing.

[14] See Complaint, supra note 1, at *3.

[15] See Harris Meyer, House Republicans seek delay in case to end ACA cost-sharing subsidies, Mod. Healthcare (Nov. 21, 2016), http://www.modernhealthcare.com/article/20161121/NEWS/161129982.

[16] Id., at *2. (citing U.S. Const. art. I, §§ 1, 7, and 9) (specifically arguing that the House has a unique role in the Appropriations Process because the Constitution specifies that appropriations bills must start in the House of Representatives).

[17] See U.S. Const. art. III, § 2, cl. 1.

[18] Complaint, supra note 1, at *18.

[19] U.S. Const. art. I, § 7.

[20] H.R. Rep. No. 113-561 pt. 1, at 23 (2014).

[21] See Daren Bakst, 5 Ways Congress Can Push Back on Obama’s Executive Action on Immigration, Daily Signal (Nov. 24, 2014), http://dailysignal.com/2014/11/24/5-ways-congress-can-push-back-obamas-executive-actions-immigration/ (addressing other ways the legislature can interfere with the Executive Branch, including refusing to conduct hearings on Presidential appointments, or even shutting down the government).

[22] See H.R. Rep. No. 113-561 pt. 1, at 21 (2014).

[23] See Paul Waldman, Commentary: Republicans suddenly realize destroying the health-care system might be a bad idea, Chi. Trib. (Feb. 22, 2017), http://www.chicagotribune.com/news/opinion/commentary/ct-republicans-destroy-health-care-obamacare-20170222-story.html.

[24] See Memorandum Opinion at *76-77, House v. Burwell, 130 F. Supp. 3d 53 (D.D.C. 2014), modified, No. 14-1967 (RMC), 2016 WL 2750934, (D.D.C. May 12, 2016), appeal docketed, No. 16-5202; House v. Burwell, No. 14-1967 (RMC), 2016 WL 2750934, at *1 (D.D.C. May 12, 2016), appeal docketed, No. 16-5202.

[25] Simon Lazarus, The Obama Administration’s Lawful Decision to Fund Affordable Care Act Cost-Sharing Subsidies, Am. Const. Soc’y for L. & Pol’y (July 18, 2016), http://www.acslaw.org/acsblog/the-obama-administration%E2%80%99s-lawful-decision-to-fund-affordable-care-act-cost-sharing; see also Paul Waldman, Commentary: Republicans suddenly realize destroying the health-care system might be a bad idea, Chi. Trib. (Feb. 22, 2017), http://www.chicagotribune.com/news/opinion/commentary/ct-republicans-destroy-health-care-obamacare-20170222-story.html.

[26] See id.; see also Kimberly Leonard, GOP Moves to Delay Obamacare Lawsuit, U.S. News & World Rep. (Feb. 21, 2017), https://www.usnews.com/news/health-care-news/articles/2017-02-21/in-house-v-price-gop-moves-to-delay-obamacare-undoing.