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In a setback for the Obama health care law, a federal judge ruled Thursday that the administration is unconstitutionally subsidizing medical bills for millions of people while ignoring congressional power over government spending. The ruling from U.S. District Judge Rosemary Collyer was a win for House Republicans who brought the politically charged legal challenge in an effort to undermine the law. (5/12)

Judge Rosemary M. Collyer sided with the House in its challenge to the administration’s funding of a program to help as many as seven million lower-income people pay deductibles, co-payments and other out-of-pocket expenses under the law. Congress never provided explicit authority for the spending, she ruled. “Such an appropriation cannot be inferred,” the judge said in her opinion. She blocked further spending under the program but said that order would be suspended pending an appeal by the Obama administration. No immediate disruption in the program was anticipated. (Hulse, 5/12)

Cost-sharing subsidies reduce consumers' insurance payments — an important feature of the Affordable Care Act, because deductibles are rising. Under the law, subsidies are available to people who earn between 100% and 400% of the federal poverty level, with extra assistance available for those up to 250%. For a family of four, that’s about $24,000 to $61,000. (Wolf, Korte and O'Donnell, 5/12)

The House GOP argued that the administration’s decision to subsidize deductibles, co-pays and other “cost-sharing” measures was unconstitutional because Congress rejected an administration request for funding in 2014. Obama officials said they withdrew the request and spent the money, arguing that the subsidies were covered by an earlier, permanent appropriation. House Republicans have tried repeatedly, without much success, to repeal parts or all of the health-care law, holding dozens of votes on the matter over the past five years. Thursday’s ruling may represent their most significant victory in trying to dismantle the ACA. (Hsu, Jaffe and Sun, 5/12)

The Obama administration argued that the provision was so tightly woven into the way Obamacare works that the appropriation was obvious, when the law is read as a whole. (Williams, 5/12)

The 38-page opinion highlights the repeated complaint from Republicans that Obama and his administration have ignored constitutional limits on their authority. The Constitution says "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law," Collyer noted, but the administration has continued to pay billions to insurers for their extra cost of providing health coverage. "Paying [those] reimbursements without an appropriation thus violates the Constitution," she wrote. "Congress is the only source for such an appropriation, and no public money can be spent without one." (Savage, 5/12)

The ruling, if it stands, could be a significant financial setback for the millions of low-income Americans who benefit from the cost-sharing subsidies, which help people pay for out-of-pocket costs like co-pays at a doctor’s office. It would not be a fatal blow to the future of the president’s signature domestic policy achievement, but it could push insurance costs higher. (Haberkorn, 5/12)

The White House had hoped to move beyond years of blockbuster court battles, most of which it won. The ruling gives a boost to GOP arguments that Mr. Obama has exceeded limits on his authority. And if it holds up on appeal, the decision could hobble the health law. White House spokesman Josh Earnest referred questions about an appeal to the Justice Department, but said the lawsuit was an unprecedented use of the courts to resolve a political dispute between the two parties. “It’s unfortunate that Republicans have resorted to a taxpayer-funded lawsuit to refight a political fight that they keep losing. They’ve been losing this fight for six years. And they’ll lose it again,” he said. (Kendall, Armour and Wilde Mathews, 5/12)

The White House said on Thursday the U.S. Department of Justice was still deciding whether to appeal a court ruling challenging President Barack Obama's healthcare law, but a spokesman predicted Republicans ultimately would lose the fight. (5/12)

Health plans would likely feel the financial hit if the courts ultimately strike down Obamacare's cost-sharing subsidies. That's because those payments go directly to insurers to make up for lower payments from their poorest customers. A federal court ruled today that the Obama administration has been improperly funding the cost-sharing subsidies. The ruling is stayed pending appeal, so there will be no immediate fallout for health plans. But at stake is approximately $175 billion over a decade that insurers would receive to subsidize their Obamacare customers. (Demko, 5/12)

Hospital and insurer stocks dropped after a federal judge in Washington ruled that some of the funding for President Barack Obama’s signature health-care law is unconstitutional, potentially jeopardizing a source of their revenue. (Lauerman, 5/12)

More than six years after becoming law, the Affordable Care Act continues to face legal challenges, including the case decided Thursday by a federal district judge in Washington. Among the pending lawsuits: House of Representatives v. Burwell ... West Virginia v. Health and Human Services Department ... [and] Contraceptive mandate cases. (5/12)