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Thursday, October 26, 2017

Federal Judge Refuses to Slow the Demise of Obamacare

The Affordable Care Act requires health insurance companies to subsidize the cost of co- payments and deductibles for lower-income people. In turn, the Act requires the federal government to make advance payments to the companies to cover the cost of this subsidy. The legal problem in this case is that while the Act requires the insurance companies to be paid, but the Act did not actually appropriate money for these payments. If Congress doesn't appropriate money for a program, the Constitution prohibits the executive branch from spending money on that program – even if Congress previously enacted a statute requiring the expenditure.

The Obama Administration took the position that the Affordable Care Act indeed appropriated money for the payments, so it drew funds from the U.S. Treasury every month to make them. The Trump Administration initially continued this practice, but has now concluded that the Act did not actually make the necessary appropriation and terminated the payment effective October 2017, at least until Congress decides to appropriate the money.

In response, the State of California, along with 17 other states and the District of Columbia, filed this lawsuit, contending the Obama Administration was right.  They sought an emergency ruling requiring the Trump Administration to continue making the payments while the lawsuit is pending.

On Wednesday October 2017, a California Federal District Judge Vince Chhabria denied the States’ request. His ruling made these two critical findings. First, although the case is at an early stage, and although it's a close question, it appears initially that the Trump Administration has the stronger legal argument. Second, and more importantly, the emergency relief sought by the states would be counterproductive. State regulators have been working for months to prepare for the termination of these payments. That would not include the State of Alabama, from what I have been told. And although you wouldn't know it from reading the states' papers in this lawsuit, the truth is that most state regulators have devised responses that give millions of lower-income people better health coverage options than they would otherwise have had. This is true in almost all the states joining this lawsuit, including California, whose regulators issued a press release just days before the suit explaining how so many lower-income people will benefit.

Common Sense Counsel: I recently presented a plan to local industry titled President Delivers Opportunity to Lower Employer Medical Cost to band together and explore the formation of a Multiple Employer Welfare Arrangement (MEWA), with employee incentivized Health Reimbursement Accounts (HRA) coupled with wellness plans, child care scholarships, that would enjoy lower premiums, more local control of healthcare decisions and result in happier and healthier employees – an employer’s greatest asset! See my 10.15.2017 Column Trump Decides to Lower Small Business Health Care Premiums for details.  Expect the slow demise of Obamacare, sky rocking premium increases, deductibles and co-pays in Alabama in 2018. The solution to healthcare is local. It is not found in Washington. 

Tommy Eden is a partner working out of the Constangy, Brooks, Smith & Prophete, LLP offices in Opelika, AL and can be contacted at or 334.246.2901 or 205.222.8030. Blog at