• An update on House v. Burwell

    In House v. Burwell news, the Obama administration and the House of Representatives have each filed their final briefs on whether Congress has supplied an appropriation for the cost-sharing subsidies. The government has requested oral argument in the case, but a hearing date has yet to be scheduled.*

    What happens when and if the court issues her opinion, presumably about a month or so after a hearing date, and says there’s no appropriation for the cost-sharing subsidies? At least initially, nothing. Given the difficulty of the legal questions, both on standing and the merits, either the district court or the court of appeals will enter a stay pending appeal. Cost-sharing subsidies will keep flowing.

    The judge’s decision, though, will raise the prospect—remote, I think, but real—that the House could ultimately prevail. What effect would that have on the ACA? The answer is complicated. As I explain here, insurers will likely be able to file lawsuits in the Court of Federal Claims to recoup what they’re owed. But that’ll take time and recovery isn’t guaranteed.

    In the meantime, the ACA will still require insurers to give a cost-sharing break to their low-income customers. The federal government won’t be able to pay insurers back, however, which will force insurers to raise premiums on all their customers to cover the shortfall. As premiums increase, the premium subsidies that people use to buy exchange plans receive from the federal government will also have to increase.

    But that’s all very general. Can we put some numbers on it? The Urban Institute recently released a study by Linda Blumberg and Matthew Buettgens—highlighted prominently in the administration’s brief—that does just that. The study is carefully hedged; there’s loads of uncertainty here, and Urban doesn’t factor in the possibility of recovering the money through litigation.

    Still, the top-line figures are arresting. Under Urban’s model, premiums for a silver plan would increase, on average, by $1,040 per person. Cost-sharing subsidies would end, but premium subsidies would go up, yielding $3.6 billion in increased federal outlays each year. Yup, that’s right. If the House wins, it’ll increase federal spending by billions of dollars. How’s that for fiscal rectitude?

    Studies from Urban and RAND played an important role in King v. Burwell. They gave the courts solid estimates of how the ACA would totter if the premium subsidies were eliminated in two-thirds of the states. That helped the Supreme Court to see just how unlikely it was that Congress meant to undermine its own handiwork when it used the phrase “established by the State.”

    It remains to be seen whether such an approach will carry the day here. I have my doubts. But Urban’s model offers the first concrete sense of what a House victory would look like—and it doesn’t look pretty.


    * An earlier version of this post said, incorrectly, that the government had not requested oral argument. I misread an earlier stipulated order on a scheduling motion—totally my fault.

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