New Obamacare Court Challenges Emerge

Justin Haskins Heartland Institute
Published November 18, 2015

Consumer Power Report #482

Hold on to your wallets America: It’s Obamacare’s open-enrollment season, and health insurance costs continue to go up across the board for consumers in nearly every part of the nation.

According to a report by CNBC, cost increases are expected to be particularly painful for those bargain shoppers looking to pay as little as possible on premiums by purchasing a bronze plan – the cheapest health plans offered in the health insurance exchange. A study by reveals average bronze plan premiums and deductions for 2016 have risen by 11 percent from 2015.

Gold plan premiums also increased, by 8 percent, and the average lowest-priced silver plans – the plan chosen by more than two-thirds of exchange customers for 2015 – rose by a shocking 13 percent.

While Obamacare exchange shoppers across the country lament the ever-increasing costs associated with President Barack Obama’s signature law, lawyers are preparing to head back to federal court once again to challenge various aspects of the Affordable Care Act (ACA) or the Obama administration’s implementation of it.

The most highly anticipated case is U.S. House of Representatives v. Burwell. In November 2014, the House of Representatives, led by former House Speaker John Boehner (R-OH), filed suit against the U.S. Department of Health and Human Services (HHS), HHS Secretary Sylvia Burwell, and the U.S. Department of the Treasury. The House claims the Obama administration violated the Constitution by spending $3 billion on subsidies without approval from Congress, which has the authority under Article 1, Section 1 of the Constitution to control public spending at the federal level: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law …”

The $3 billion in question was requested by the Obama administration to pay back health insurance companies for costs they covered as part of ACA’s cost-sharing reduction (CSR) subsidy program. Cost-sharing reduction subsidies are meant to cover a significant portion of out-of-pocket costs for qualified individuals who buy a silver health insurance plan through a federal or state Obamacare exchange and earn between 100 and 250 percent of the federal poverty line. There are three levels of CSR subsidies, which are applied based on income level.

According to Obamacare Facts, “CSR subsidies reduce your out-of-pocket expenses by raising the actuarial value of your plan (the average out-of-pocket costs an insurer pays on a plan). Specifically, they raise coinsurance, and lower copays, deductibles, and maximum out-of-pocket costs you will pay in a policy period. This means that some folks will not only qualify for lower premiums on a Silver plan via tax credits, but may also get the out-of-pocket costs similar to a Gold or Platinum plan.”

The Congressional Budget Office estimates CSR subsidies will cost taxpayers about $136 billion over the next decade.

Unlike the taxpayer subsidies offered directly to consumers through the exchange, CSR subsidies are initially covered by insurance companies, who are then reimbursed by the government. Taxpayer subsidies provided directly to Americans purchasing health insurance through the exchange are permanently appropriated under ACA, but the funds to cover CSR subsidies must be appropriated regularly by Congress, which could, without passing any new legislation, determine it no longer will appropriate funds for CSR subsidies.

For fiscal year 2014, HHS requested $4 billion to cover CSR subsidies and another $1.4 billion for the first quarter of fiscal year 2015. The Republican-led Congress refused to appropriate the funds, but the Obama administration made the payments anyway, causing Boehner and the House to sue.

The Obama administration objected to the suit on the grounds the House does not have standing, but in September 2015, U.S. District Court Judge Rosemary Collyer ruled in favor of the House, setting up another Obamacare federal appellate court showdown in the coming months. If the courts back Collyer’s ruling, the merits of the case will likely reach the U.S. Supreme Court in 2016 or 2017, where the Obama administration’s power grab will again be on trial.

A second Obamacare case I’ve been watching closely in 2015 is Cutler v. U.S. Department of Health and Human Services. Jeffrey Cutler, the tax collector of East Lampeter Township, Pennsylvania, lost his health insurance policy in October 2013, along with countless other Americans, when he discovered his plan did not meet the minimum legal qualifications established by ACA. Cutler had enjoyed his plan since 2007, and he told Consumer Power Report he had no intention of changing it prior to it being canceled.

When reports began to surface in 2013 of all the people who had lost their health insurance plans, Obama announced a “transition policy” in November 2013 that would allow states to decide whether they would allow individuals with non-qualifying plans to keep their health insurance policies and for how long.

In Pennsylvania, the government allowed insurers to determine whether they would let their customers keep health insurance policies that did not meet ACA requirements. Cutler’s insurer decided to cancel his policy. Cutler sued in December 2013 on two grounds. First, he claimed Obama’s transition policy violated the equal protection guarantee of the Fifth Amendment because it allowed states to apply federal law in fundamentally different ways on a state-by-state basis. Second, Cutler, who is Jewish, argues the mandate to purchase health insurance violates his religious rights under the First Amendment and that the law is fundamentally unjust because it allows certain religious groups to obtain exemptions from the individual insurance mandate.

Cutler’s case was rejected in the D.C. Circuit Court because the court ruled he didn’t have standing. The case was appealed to the D.C. Court of Appeals, a notoriously liberal court, and it was thrown out again for lack of standing.

Despite the case’s previous legal troubles, the American Freedom Law Center (AFLC), led by highly respected constitutional attorneys David Yerushalmi and Robert J. Muise, says Cutler has a real opportunity to get his case to the U.S. Supreme Court. On November 12, 2015, AFLC filed its Supreme Court petition on Cutler’s behalf, and I’ve been told a response is expected by early January 2016.

The legal assault against Obamacare continues, but regardless of the outcome of these important cases, there’s only one way to eliminate the program completely: Elect in 2016 a president and members of Congress who promise to repeal and replace Obamacare with reforms that will respect individual liberty, provide access to quality health care to everyone, and utilize, rather than attack, the power of the free market.

— Justin Haskins



Personal spending on health care in Colorado has quadrupled in the past two decades, mirroring a national trend of soaring medical costs.

“Health care spending has been rising as a share of household income for decades and is expected to keep rising,” the Colorado Commission on Affordable Health Care has reported to Gov. John Hickenlooper and legislative committee leaders.

“Without changes in the health system as a whole, achieving cost sustainability or stability will be out of reach for most Coloradans,” the report said.

The commission, created legislatively last year, stopped short in its initial report of prescribing wholesale changes. It plans to offer recommendations in 2017 after holding nine community meetings statewide next spring.

Leaders of legislative health care committees agree that the existing system is becoming too expensive. They differ somewhat about solutions.

SOURCE: By David Olinger, The Denver Post


The vast majority of small businesses are paying more for health insurance for their employees under the health-care law, and many expect their costs to keep going up next year, according to a survey by the advocacy group National Small Business Association.

Ninety percent of owners said their costs are up in 2015 over last year, and 84 percent expect to pay more in 2016.

SOURCE: Wire Reports


Nationally, more health care providers are embracing the direct-pay, or “concierge medicine,” model.

A Physicians’ Foundation 2014 survey found 7 percent of doctors run a direct-pay practice and another 13 percent plan to transition to some form of direct-pay model. …

Health care providers say they are transitioning to direct-pay medicine because they are able to spend more time with fewer patients, which allows them to drill down to the cause of a medical issue instead of ordering extra tests. The doctors are also more readily available to patients after hours.

SOURCE: By Jen Rini, The News Journal (Wilmington, Delaware)


Federal prosecutors announced Monday they’ve filed criminal charges against 28 people involved in a “complex and sprawling health care fraud scheme” that cost the government $8.7 million.

All 28 have signed documents indicating they would plead guilty, according to the U.S. Attorney’s office in Dallas. Others could still be charged. …

The defendants included doctors and medical providers, independent claims consultants, a senior claims examiner for the federal Department of Labor, and 21 people who said they had injuries preventing them from returning to work. In one case, a Department of Labor senior claims examiner received $24,000 in bribes from a former claims examiner working as a consultant.

Federal officials said the ring fraudulently billed the government for $9.5 million in bogus claims and received $8.7 million. Shutting down the operations will save the government least $11 million in future spending on those defendants’ claims, according to the U.S. Attorney’s office.

SOURCE: By Jeff Mosier, The Dallas Morning News


House Speaker Paul Ryan is giving an important boost to a mental health bill from Rep. Tim Murphy (R-Pa.)

In an interview with 60 Minutes this weekend, Ryan personally advocated for Murphy’s bill, which he said could be a response to the nation’s growing gun violence problem.

“I think we need to improve our mental health laws so we can address these problems before they get out of control, because mental health is a component to a lot of these shootings that, I think, we have not looked at seriously enough,” Ryan said.

Murphy’s bill, which would overhaul the system for treating seriously mentally ill people, was cast as the Republican response to the 2012 Sandy Hook Elementary School shooting when the measure was first introduced in 2013.

The controversial measure has been delayed for years. Former Speaker John Boehner (R-Ohio) had supported the reforms broadly, but tried to break up the bill to dilute some of its controversy.

SOURCE: By Sarah Ferris, The Hill