In a big victory for House Republicans, a federal judge has ruled that one of the Obamacare subsidies that pays insurance companies to cover out-of-pocket medical expenses for poor people is unconstitutional.

The subsidy that helps consumers pay for insurance premiums was not at issue.

The Hill:

In a major ruling, Judge Rosemary Collyer, an appointee of President George W. Bush, said the administration does not have the power to spend money on "cost sharing reduction payments" to insurers without an appropriation from Congress.

Collyer's decision doesn't immediately go into effect, however, so that the administration can appeal it.

“This is an historic win for the Constitution and the American people," Speaker Paul Ryan (R-Wis.) said in a statement. "The court ruled that the administration overreached by spending taxpayer money without approval from the people's representatives."

At issue are billions of dollars paid to insurance companies participating in ObamaCare so they can reduce customers' out-of-pocket costs, such as deductibles for low-income people. 

The House GOP argued that the administration was unconstitutionally spending money on these payments without Congress's approval.

But the administration said it did not need an appropriation from Congress because the funds were already guaranteed by the healthcare reform law in the same section as its better-known tax credits that help people pay for coverage. 

Collyer ruled that the section only appropriated funds for tax credits and said the cost sharing reductions require a separate congressional appropriation, which the administration does not currently have. 

“Such an appropriation cannot be inferred,” Collyer wrote. “None of Secretaries’ extra-textual arguments — whether based on economics, ‘unintended’ results, or legislative history — is persuasive. The Court will enter judgment in favor of the House of Representatives and enjoin the use of unappropriated monies to fund reimbursements due to insurers under Section 1402.” 

Unlike previous ObamaCare lawsuits, this one is not expected to deal a crippling blow to the law if Republicans ultimately prevail.

A study from the Urban Institute found that a GOP victory would force insurers to make a major adjustment and hike premiums, but government subsidies would increase to help make up the difference and the system would likely not face major negative consequences.  

Still, the case adds a major element of uncertainty to a healthcare system trying to adapt to ObamaCare. 

Lawsuits against the executive branch by the legislative branch are usually thrown out.  Federal judges shy away from getting involved in these arguments because they tend to be political fights – a point raised by the administration in its arguments against the suit. 

But Judge Collyer evidently believed that the constitutional issue superseded that argument and agreed to rule on the suit.

The battle now moves to the D.C. Court of Appeals to face an uncertain future.  The issue of standing could come up on appeal, and given the nearly unprecedented action by Judge Collyer to allow the suit to go forward, it could very well be dismissed.