3 Possible Effects of the New Supreme Court ACA Ruling, for Agents

Critics of the ACA cost-sharing reduction subsidy program say it should be funded with an ordinary congressional appropriation, rather than drawing on the same pool of money that the premium tax credit subsidy was supposed to use money appropriated by Congress. Congress has refused to appropriate the money.

The U.S. Court of Federal Claims has ordered the federal government to make $1.6 billion in cost-sharing reduction subsidy payments to health insurers for coverage provided in 2017 and 2018. The Centers for Medicare and Medicare Services is still deciding how much cost-sharing reduction subsidy money might be at stake for 2019.

Maine Community Health Options Ruling Implications

One immediate effect of the new ruling is that it could make the ACA individual major medical market more appealing to health insurers, by raising the possibility that health insurers in the market could split a $12 billion pot of recovery cash, and at least reducing the possibility that the federal government will suddenly yank other promised payments away.

Matt Eyles, president of America's Health Insurance Plans, said in a statement about the ruling that millions of Americans rely on the individual and small group markets for their coverage and care.

"They deserve a steady market that provides them with affordable choices," Eyles said. "Health insurance providers are focused on delivering for them, and they depend on the federal government to be a fair and reliable business partner committed to the same goal."

The ruling could also affect other ACA cases that are still working their way through the courts.

Justice Sonia Sotomayor writes in the new ruling, for seven other justices, that Congress can't cancel an agreement to pay someone by refusing to provide the funding for the payment.

Sotomayor writes:

As we have explained, " '[a]n appropriation per se merely imposes limitations upon the Government's own agents,'" but "'its insufficiency does not pay the Government's debts, nor cancel its obligations.'"

This point could affect other cases that hinge on efforts by Congress to block programs by setting appropriations for the programs at zero.

Members of Congress have used the "zeroing out" strategy because some spending and appropriations bills can get through the Senate with just 51 votes.

Other bills, such as bills that change federal policies, usually need at least 60 votes to come up for a vote on the Senate floor.

That means zeroing out the funding for a program is usually easier than changing or canceling the program.

Here are the three streams of ACA litigation that could be affected by the debate about what exactly Congress can zero out:

1. The ACA Cost-Sharing Reduction Subsidy Program Fight

ACA opponents in Congress have tried to block the operation of the cost-sharing reduction subsidy program by refusing to let Congress appropriate the money to operate it.

That means a federal appeals court, or even the Supreme Court, could revisit the Sotomayor opinion the next time a cost-sharing reduction subsidy case comes up.

2. The ACA Risk-Adjustment Program Subsidy Program Fight

Some health insurers say the federal government should lubricate the ACA risk-adjustment program by adding federal subsidy money, the way it uses already subsidy money to lubricate the Medicare Advantage risk-adjustment program, rather than making the ACA subsidy program be entirely self-sustaining.

The arguments health insurers have made about the federal government's responsibility for funding the risk-adjustment program have been similar to the arguments made about the risk corridors program.

Health insurers could point to the Sotomayor opinion when arguing ACA risk-adjustment program cases in court. They may say the United States still has an obligation to make the payments described in the ACA cost-sharing reduction subsidy program provisions, even though te funding for the program has gone away.

3. The ACA Constitutionality Fight

In 2017, Congress has passed a budget package that included a provision that zeroed out the ACA individual mandate penalty. The ACA still requires many people to have a minimum level of health coverage or pay a penalty, but the penalty owed is now zero.

In 2012, the U.S. Supreme Court ruled that ACA opponents could not oppose the ACA individual mandate because the mandate penalty was a tax, and a federal law, the Anti-Injunction Act of 1867, prohibits plaintiffs from suing to block federal taxes.

ACA opponents now argue, in the case that was originally known as Texas v. USA, and is now known as California v. Texas, that, because the ACA individual mandate provision is no longer a tax provision, plaintiffs can now challenge the constitutionality of the provision in federal court.

The ACA coverage ownership provision is now an unconstitutional requirement for people to own a commercial insurance product, the ACA contains no provision saving the rest of the statutory package if one part is found to be unconstitutional, and that means all of the ACA is now unconstitutional, ACA opponents contend.

Because ACA opponents relied on zeroing out of the individual mandate penalty to block the individual mandate, rather than repealing or changing the language of the penalty provision, the Supreme Court could end up debating whether simply zeroing out the mandate penalty amount changed the nature of the penalty provision.

— Read Supreme Court Will Save Most of ACA: Health Insurer Group Head, on ThinkAdvisor.

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