Affordable Care Act Battle Returns to Court and Capitol Hill

WASHINGTON—The battle between congressional Republicans and the White House over the Affordable Care Act is again escalating—in court and on Capitol Hill.

The administration on Wednesday appealed a federal trial judge’s ruling that the government is improperly reimbursing insurers under a program to cover discounts for low-income consumers.

And House Republicans on Thursday began two days of hearings to hammer away at the issue. They released a report that said the administration distributed the funds even though it was aware it needed Congress’s approval.

The standoff centers on a program that reduces out-of-pocket costs for very-low-income individuals. The Congressional Budget Office has estimated the costs will come to about $130 billion from 2017 through 2026. The program helps reduce consumers’ deductibles, coinsurance and copayments; it is different from another part of the 2010 health law that helps reduce the cost of insurance premiums for eligible individuals.

House Republicans in 2014 filed a lawsuit over the payments. They alleged the administration defied Congress and paid the money to insurers for discounts they are required to offer. Lawmakers said they never appropriated the funds for the administration to do so.

The administration maintains the funds were available in another part of the law that provides money from the Treasury for the program that reduces health-insurance premium costs. More than six million people benefit from cost-sharing reductions.

In May, U.S. Judge Rosemary Collyer sided with Republicans but stayed her decision to give the administration an opportunity to appeal.

The appeal filed Wednesday in U.S. Court of Appeals for the District of Columbia Circuit advances a battle over a central pillar of the health law on the cusp of a 2016 election season that has cast new uncertainty over the fate of the law. The appeal will be assigned to a three-judge panel.

While the appeal was expected, its timing as House Republicans hold hearings on the program is likely to reignite GOP claims President Barack Obama has exceeded his authority.

Republicans on a House Ways and Means subcommittee said Thursday that the administration obstructed their investigation by not complying with subpoenas for documents. Officials with federal agencies said they have been responding and working with the committee.

“The lengths we’ve had to go in this investigation clearly underscore the unprecedented level of obstruction by the administration,” Ways and Means Chairman Kevin Brady (R., Texas) said.

Rep. John Lewis (D., Ga.) questioned the purpose of the hearing because he said the fate of the program rests between on a lawsuit between two branches of government.

“I’m afraid it is nothing more than another attempt to roll back health-care reform,” said Mr. Lewis.

Write to Stephanie Armour at stephanie.armour[a]