D.C. Circuit Keeps Obamacare Subsidy Case Alive

Steven D. Schwinn, John Marshall Law School

The D.C. Circuit earlier this week allowed 17 states and the District of Columbia to intervene in the suit challenging federal subsidies to insurance companies under the Affordable Care Act.

The development keeps the appeal alive, even as President Trump considers halting the payments. Such a move before this week's ruling would have mooted the appeal. But now that the states can defend the payments, and oppose Judge Collyer's ruling, it's not entirely clear whether President Trump can stop the payments, or whether the D.C. Circuit might stop him if he tried.

Recall that House Republicans sued the Obama Administration for making payments to insurance companies under the ACA, even though the line-item for those payments was zero funded. The payments were designed under the ACA to subsidize insurance companies for providing affordable plans on the exchanges. But Congress allocated no money to the line-item designated for the subsidies. The Obama Administration nevertheless made payments, drawing money from another, related account. (Without the payments, insurance rates would skyrocket on the exchanges, or insurers would have pulled out, or both.)

House Republicans sued, and Judge Rosemary Collyer (D.D.C.) ruled in their favor. But she stayed her injunction pending appeal. President Trump then inherited the appeal from the Obama Administration, allowing him to drop the appeal, leave Judge Collyer's decision in place, and stop the payments. (If President Trump dropped the appeal, Judge Collyer's stay pending appeal would have gone away.) He could even have cited Judge Collyer's ruling as a reason for stopping payments, perhaps diffusing some of the political blow-back from such a move.

But President Trump didn't drop the appeal. Moreover, he has continued the payments, even as he repeatedly suggests that he might stop. Bipartisan lawmakers have encouraged him to continue payments. A final decision is due from the White House this week.

Now, with this most recent order from the D.C. Circuit, allowing states to join the suit, the appeal will continue (with the states now defending the payments, even as the Trump Administration doesn't), and Judge Collyer's stay will remain in place, at least until the D.C. Circuit rules on the case. While the stay itself doesn't prevent the President from halting payments, the states' intervention might: Because the D.C. Circuit said that the states demonstrated sufficient harm if the subsidies stop (a condition of intervention), it's not entirely clear that President Trump can stop them. And even if he can, it's not clear that the D.C. Circuit might not prevent him from stopping them (in order not to harm the states).

In other words, the states' intervention might tie the President's hands by forcing him to continue payments, even though the parties to the lawsuit might otherwise agree to stop the payments and let the case go moot.

The uncertainty here comes, on the one hand, from the fact that the President can probably stop the payments whenever he wants, irrespective of the states' intervention or Judge Collyers' ruling and stay. But on the other hand if the states argue that the President has to make payments under the ACA (and not just that he can't be prevented from making payments), then the D.C. Circuit could stop the President from halting payments. This week's ruling suggests, but does not specifically say, that the D.C. Circuit is leaving this latter option open.

But it gets even weirder. The D.C. Circuit might not even rule on the merits. That's because the states will surely challenge the House's standing to bring the case in the first place. If the D.C. Circuit kicks the case on standing grounds, that'll undue Judge Collyer's decision against the payments.

For now, the ball's in the President's court.