A U.S. judge on Thursday handed a victory to congressional Republicans who challenged the implementation of a provision of President Barack Obama's signature healthcare law involving reimbursements from the government to private health insurers.
U.S. District Judge Rosemary Collyer, based in Washington, ruled that the Obama administration cannot spend funds Congress did not appropriate in reimbursing insurance companies for reductions they are required to make under the law to customers' out-of-pocket medical payments.
Collyer said the administration has spent "billions of dollars" on such reimbursements since January 2014.
White House spokesman Josh Earnest said the Republican-led House of Representatives, which brought the case, ultimately would lose.
"This suit represents the first time in our nation's history that Congress has been permitted to sue the executive branch over a disagreement about how to interpret a statute," Earnest told a briefing.
"It's unfortunate that Republicans have resorted to a taxpayer-funded lawsuit to re-fight a political fight that they keep losing," Earnest added. "They've been losing this fight for six years, and they'll lose it again."
Conservatives have mounted a series of legal challenges to the law, known as Obamacare, since it was passed by Congress over unified Republican opposition. Collyer was appointed to the bench by Republican former President George W. Bush.
The ruling will not have an immediate effect on the 2010 law, considered Obama's signature domestic policy achievement, because the judge stayed the ruling pending appeal. As part of the expected appeal, the administration is likely to press its argument that the House does not have legal standing to sue.
The case focuses on a cost-sharing provision of Obamacare that requires insurers to reduce deductibles and co-pays. Insurers are supposed to be reimbursed for these costs by the federal government.
The Obama administration has interpreted the provision as a type of federal spending that does not have to be explicitly authorized by Congress, but the House Republicans who filed the challenge disagreed.
"BIG win for the Constitution," House Speaker Paul Ryan wrote on Twitter in response to the ruling.
The House Republicans argued that the administration's action violated the U.S. Constitution because it is the legislative branch, not the executive branch, that authorizes government spending.
Collyer ruled that the cost-sharing provisions cannot be funded through the same permanent appropriation that covers tax credits made available under the healthcare law.
The judge rejected the Obama administration's contention that the appropriation should be viewed as permanent because the alternative interpretation would lead to "absurd economic, fiscal and healthcare policy results."
The U.S. Supreme Court in June 2015, in a ruling authored by Bush-appointed Chief Justice John Roberts, rejected a conservative challenge that could have gutted Obamacare, upholding nationwide tax subsidies crucial to the law. Roberts also wrote a major 2012 ruling preserving Obamacare.