House GOP lawsuit: ACA payment transfers violate separation of powers

Additional details have surfaced about a key argument in last month's lawsuit filed by the House of Representatives, which claimed the White House is violating the Constitution in its implementation of the healthcare reform law.

The lawsuit highlighted two main points: Delaying the employer mandate and allegedly transferring money to insurance companies illegally.

The latter issue raises the concern that paying insurer subsidies out of an account not allotted by Congress violates the Constitutional separation of powers, reports USA Today.

Under the Affordable Care Act, insurers receive subsidies as a way to reduce out-of-pocket expenses for low-income consumers. While the ACA did, in fact, allow these payments to occur, no exact amount was set aside.

The lawsuit argues that the funds should have come from an annual amount issued by Congress. Instead, the Department of Treasury, which is part of the executive branch, pays the subsidies from the same Internal Revenue Services (IRS) account that issues tax credits to low-income individuals who buy health insurance on the exchanges, notes the article.

Under the ACA, the lawsuit argues, the IRS account is used only to pay tax credits. Subsidies are not considered a tax credit.

If the lawsuit gains traction, the loss of subsidies for insurers could negatively impact millions of low-income consumers. "For a lot of those individuals, without additional financial support, they probably would have to drop coverage. They just don't have the working capital in a family budget to afford it. So it's a critical part of the puzzle," former Department of Health and Human Services Secretary Kathleen Sebelius told USA Today.

What's more, another ruling could dampen the hopes of low-income individuals who need financial assistance to obtain insurance. Last month, the Supreme Court agreed to hear the federal subsidy case of King v. Burwell. If the court overrules the decision, consumers will be left without subsidies to help pay their insurance premiums, FierceHealthPayer previously reported.

For more:
- here's the USA Today article