Tag Archives: unconstitutional

The Constitution Finally Takes Precedence over Obamacare

Late Thursday evening, the Administration announced that it was immediately ending cost-sharing reduction payments to health insurers offering plans in Obamacare Exchanges. And regardless of what the press or liberals might claim, the decision isn’t, or shouldn’t be, about “sabotage.” It isn’t, or shouldn’t be, about Obamacare “imploding.” It’s about one thing—and one thing only: The rule of law.

The text of Obamacare nowhere includes an appropriation for the cost-sharing reduction payments, which reimburse carriers for discounting deductibles and co-payments for low-income Exchange enrollees. The Obama Administration knew that—but went ahead and made the payments anyway. One slight problem: The Constitution clearly gives the “power of the purse” to Congress: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

Without an appropriation, the Trump Administration has no choice but to end the payments to insurers—just as the Trump Administration would have no choice but to make the payments to insurers if an appropriation existed. One can easily make the argument—as this observer has—that the Administration should have ended the payments months ago.

But in time the Trump Administration did conclude—correctly—that President Obama had no more authority to make Obamacare payments without an appropriation than President Trump has to make payments for a border wall without an appropriation. By complying with the law and the Constitution to end the payments, President Trump actually diminished his executive power and ability to act unilaterally—restoring a rightful balance of power between the branches. Democrats fearful of the implications of three more years of a Donald Trump in the White House have reason to thank him for so doing.

But they won’t. Instead the cries of “sabotage” will continue—disregarding the fact that President Obama, by valuing Obamacare more than the Constitution itself, sabotaged the rule of law. When Tom Price resigned as Secretary of Health and Human Services last month, Senate Finance Committee Ranking Member Ron Wyden (D-OR) said his replacement “needs to be focused on implementing the law as written.” By cutting off the cost-sharing payments, that’s exactly what the Trump Administration has done—implemented the law as it was written, rather than as Democrats wished they had written it.

As for insurers, they can’t say they weren’t warned. Here’s what yours truly wrote about cost-sharing reduction payments nearly a year and a half ago:

The next President could easily wade into the [cost-sharing reduction payments]. Say a Republican is elected and he opts to stop the Treasury making payments related to the subsidies absent an express appropriation from Congress. Such an action could take effect almost immediately…Come January 2017, the policy landscape for insurers could look far different [than under the Obama Administration.]

That’s exactly what happened. Insurers gambled that they—and Obamacare—were “too big to fail,” despite a court ruling last May striking down the subsidy payments as unconstitutional. Because the court stayed that ruling, insurers assumed the next President would blithely continue the unconstitutional payments during its appeal. They assumed wrong.

Congress, having sparked the lawsuit when the House of Representatives sued to protect its constitutional prerogatives, could of course use its “power of the purse” to reinstate the cost-sharing reduction subsidies—this time through an explicit appropriation, rather than executive fiat. But before even considering such an action, it should first thoroughly investigate, and develop policies to eradicate, the “too big to fail” mentality that led insurers—and state insurance commissioners—to assume that unconstitutional acts would continue in perpetuity. Even better, Congress could instead develop ways to dismantle the structure of regulations and mandates that insurers believe requires them to receive $135 billion in subsidy payments in the first place.

For the time being, individuals likely will not see any direct effects from the payments ceasing. Carriers cannot exit Exchanges mid-year, and contracts for the 2018 plan year are already signed. (A provision in carriers’ 2017 and 2018 contracts lets them exit Exchanges if enrollees do not receive cost-sharing reductions—not if the insurers themselves do not receive reimbursement for those cost-sharing reductions. This clause, awkwardly drafted by insurers’ counsel, may provide them with little legal recourse—and further highlights their questionable assumptions and behavior surrounding the subsidies.) So maybe—just maybe—Washington can spend some time focusing on the real issue behind the Administration’s action: Upholding the Constitution.

What You Need to Know about Trump’s Executive Order on Health Care

On Thursday morning, President Trump signed an Executive Order regarding health care and health insurance. Here’s what you need to know about his action.

What Actions Did the President Take?

The Executive Order did not change regulations on its own; rather, it instructed Cabinet Departments to propose changes to regulations in the near future:

  1. Within 60 days, the Department of Labor will propose regulatory changes regarding Association Health Plans (AHPs). Regulations here will look to expand the definition of groups that can qualify as an “employer” under the federal Employee Retirement Income Security Act (ERISA). AHPs have two advantages: First, all association health plans regulated by ERISA are federally pre-empted from state benefit mandates; second, self-insured plans regulated by ERISA are exempt from several benefit mandates imposed by Obamacare—such as essential benefits and actuarial value standards.
  2. Within 60 days, the Departments of Treasury, Labor, and Health and Human Services (HHS) will propose regulatory changes regarding short-term health plans. Regulations here will likely revoke rules put into place by the Obama Administration last October. Last year, the Obama Administration limited short-term plans to 90 days in duration (down from 364 days), and prevented renewals of such coverage—because it feared that such plans, which do not have to meet any of Obamacare’s benefit requirements, were drawing people away from Exchange coverage. The Trump Administration regulations will likely modify, or eliminate entirely, those restrictions, allowing people to purchase plans not compliant with the Obamacare mandates. (For more information, see my Tuesday article on this issue.)
  3. Within 120 days, the Departments of Treasury, Labor, and HHS will propose regulatory changes regarding Health Reimbursement Arrangements (HRAs), vehicles where employers can deposit pre-tax dollars for their employees to use for health expenses. A 2013 IRS Notice prevented employers from using HRA dollars to fund employees’ individual health insurance premiums—because the Obama Administration worried that doing so would encourage employers to drop coverage. However, Section 18001 of the 21st Century Cures Act, signed into law last December, allowed employers with under 50 employees to make HRA contributions that workers could use to pay for health insurance premiums on the individual market. The Executive Order may seek to expand this exemption to all employers, by rescinding the prior IRS notice.
  4. Within six months—and every two years thereafter—the Departments of Treasury, Labor, and HHS, along with the Federal Trade Commission, will submit reports on industry consolidation within the health care sector, whether and how it is raising health care costs, and actions to mitigate the same.

How Will the Order Affect the Health Sector?

To some extent, the full impact of the Executive Order will remain unclear until the respective Departments actually release their proposed regulatory changes. For instance, it is unclear how far the Department of Labor can go in re-defining the term “employer” with respect to who can join an Association Health Plan—so it’s hard to predict the scope of the changes the rules themselves will propose.

In general, however, the issues discussed by the Executive Order will:

  • Give individuals more options, and more affordable options. Premiums on the individual market have more than doubled since 2013, due to Obamacare’s regulatory mandates. AHPs would allow workers to circumvent state benefit mandates through ERISA’s federal pre-emption of state laws; self-insured AHPs would also gain exemption from several federal Obamacare mandates, as outlined above. Because virtually all of Obamacare’s mandated benefits do not apply to short-term plans, these would obtain the most regulatory relief.
  • Allow more small businesses to subsidize workers’ coverage—either through Association Health Plans, or by making contributions to HRAs, and allowing employees to use those pre-tax dollars to buy the health coverage of their choosing on the individual market.

When Will the Changes Occur?

The Executive Order directed the Departments to announce regulatory changes within 60-120 days; the Departments could of course move faster than that. If the Departments decide to release interim final rules—that is, rules that take effect prior to a notice-and-comment period—or sub-regulatory guidance, the changes could take effect prior to the 2018 plan year.

However, any changes that go through the usual regulatory process—agencies issuing proposed rules, followed by a notice-and-comment period, prior to the rules taking effect—likely would not take effect until the 2019 plan year. While the Executive Order directed the agencies to “consider and evaluate public comment on any regulations proposed” pursuant to the Order, it did not specify whether the Departments must evaluate said comments before the regulations take effect.

Does the Order Represent a Regulatory Overreach?

Sen. Rand Paul (R-KY) was asked about this issue Thursday, given conservatives’ prior criticisms of Barack Obama’s “pen and a phone” strategy. In the case of short-term health plans and Health Reimbursement Arrangements, the Executive Order could lead the Departments merely to rescind President Obama’s prior regulations—which almost by definition cannot represent regulatory overreach.

However, with respect to Association Health Plans, some conservatives may take a more nuanced view. Conservatives generally support allowing individuals to purchase insurance across state lines, believing that such freedom would allow consumers to buy the plans that best suit their interests.

However, AHPs accomplish this goal not through Congress’ Commerce Clause power—i.e., explicitly allowing, for instance, an individual in Maryland to buy a policy regulated in Virginia—but instead through federal pre-emption—individuals in Maryland and Virginia buying policies regulated by Washington, albeit in a less onerous manner than Obamacare’s Exchange plans. As with medical liability reform, therefore, some conservatives may support a state-based approach to achieve regulatory relief for consumers, rather than an expanded role for the federal government.

Finally, if President Trump wants to overturn his predecessor’s history of executive unilateralism, he should cease funding cost-sharing reduction payments to health insurers. The Obama Administration’s unilateral funding of these payments without an appropriation from Congress brought a sharp rebuke from a federal judge, who called the action unconstitutional. If President Trump wants to end executive overreach, he should abide by the ruling, and halt the unilateral payments to insurers.

This post was originally published at The Federalist.

Insurance Commissioners’ CSR Malpractice

Today, a Senate committee hearing will feature testimony from insurance commissioners about the status of Obamacare in their home states. It will undoubtedly feature pleas from those commissioners for billions of new dollars in federal funds to subsidize insurance markets. But before Congress spends a single dime, it should take a hard look at insurance commissioners’ compliance with their regulatory duties regarding Obamacare. On several counts, preliminary results do not look promising.

Of particular issue at today’s hearing, and in health insurance markets generally: Federal payments to insurers for cost-sharing reductions, discounts on co-payments, and deductibles provided to certain low-income individuals. Obamacare authorized those payments to insurers, but did not include an appropriation for them. Despite lacking an explicit appropriation, the Obama administration started making the payments anyway when the exchanges began operation in 2014.

Rightfully objecting to an intrusion on its constitutional “power of the purse,” the House of Representatives filed suit to block the payments in November 2014. In May 2016, a federal district court judge ruled the insurer payments unconstitutional, halting them unless and until Congress granted an explicit appropriation.

By the middle of 2016, it seemed clear that the cost-sharing reduction payments lay in significant jeopardy. While the federal district court allowed the payments to continue during the Obama administration’s appeal, a final court ruling could strike them down permanently. Moreover, a new administration would commence in January 2017, and could stop the payments immediately. And neither Hillary Clinton nor Donald Trump had publicly committed to maintaining the insurer payments upon taking office.

Let’s Let the Problem Fester to Put Trump in a Bind

How did insurance commissioners respond to this growing threat to the cost-sharing reduction payments? In at least some cases, they did nothing. For instance, in response to my public records request, the office of Dave Jones, California’s insurance commissioner, admitted that it had no documents examining the impact of last May’s court ruling on the 2017 plan bid year.

To call this lack of analysis regarding cost-sharing reductions malfeasance would put it mildly. A new president could easily have cut off those payments—payments totaling $7 billion this fiscal year—unilaterally on January 20. Yet the regulator of the state’s largest insurance market had not so much as a single e-mail considering this scenario, nor examining what his state would do in such an occurrence.

For Democrats such as Jones, last year’s silence on cost-sharing reductions represents a happy coincidence. Had insurance commissioners required insurers to price in a contingency margin for 2017—to reflect uncertainty over whether the federal payments would continue—those higher premiums would undoubtedly have hurt Clinton during last fall’s campaign. Instead, liberals like Jones who remained quiet last year have suddenly started shouting from the rooftops about “uncertainty” leading to higher premiums—because they believe Trump, not Clinton, will bear the political blame.

Break the Law to Fund Our Political War Against You

Indeed, insurance commissioners who remained silent last year about cost-sharing reduction payments have responded this year in alarming fashion. The commissioners’ trade association wrote to the Trump administration in May asking them “to continue full funding for the cost-sharing reduction payments for 2017 and make a commitment that such payments will continue.”

The insurance commissioners essentially demanded the Trump administration violate the Constitution. Article I, Section 9, Clause 7 of the Constitution grants Congress the sole power to appropriate funds, and the Supreme Court in a prior case (Train v. City of New York) ruled that the executive cannot thwart that will by declining to spend funds already appropriated. Under the Constitution, a president cannot spend money, or refuse to spend money, unilaterally—but that’s exactly what the insurance commissioners requested.

By implicitly conceding the unconstitutional actions by the Obama administration, and asking the Trump administration to continue those acts, the commissioners’ own letter exposes their dilemma. Why did commissioners ever assume the stability of a marketplace premised upon unconstitutional actions? And why did commissioners purportedly committed to the rule of law ask for those unconstitutional actions to continue?

Regardless of whether members of Congress wish to make the payments to insurers, they should first demand answers from insurance commissioners for their regulatory failure. Insurance commissioners’ collective ignorance that the unconstitutional cost-sharing reduction payments could disappear closely mimics banks’ flawed assumptions in the years leading up to the subprime mortgage collapse. Unless Congress relishes the thought of passing another TARP program, they would be wise to exercise their oversight authority before they even think about getting out the taxpayers’ checkbook.

This post was originally published at The Federalist.

John Kasich’s Obamacare Bailout Plan

On Thursday morning, governors John Kasich (R-OH) and John Hickenlooper (D-CO) released a plan to “stabilize” Obamacare insurance markets. Here’s what you need to know about the details of the proposal.

John Kasich Doesn’t Want to Repeal Obamacare

It’s worth repeating that, as recently as three years ago, Kasich said the following regarding the health care law: “From Day One, and up until today and into tomorrow, I do not support Obamacare. I never have, and I believe it should be repealed.”

Oh, how times have changed. The governors’ plan would not only not repeal Obamacare, it would further entrench the law, by giving tens of billions, and more likely hundreds of billions, of new taxpayer funds to wealthy insurance companies.

Governors Want Trump to Violate the Constitution

The plan calls on the Trump administration to “commit to making cost-sharing reduction payments.” But as this space has previously described, the United States has an interesting document—you may have heard of it—called the Constitution. That Constitution places the “power of the purse” with Congress, not the executive.

If Congress does appropriate funds—for cost-sharing reductions or anything else—the executive cannot refuse to spend that money, per a prior Supreme Court ruling. But if Congress does not appropriate funds, the executive cannot spend money. To do otherwise would violate a criminal statute.

Asking the Trump administration to violate the Constitution may seem like a natural request to someone like Kasich, a big-government liberal who ran into legal trouble for expanding his state’s Medicaid program unilaterally. But our nation is a government of laws, not men, which makes obeying the law an obligation of all citizens, let alone the chief executive.

A Selective History on Reinsurance

The blueprint cites Republicans’ proposed “stability funds” during the “repeal-and-replace” debate to suggest a “temporary” stability fund providing corporate welfare to insurers—demonstrating the lack of wisdom of the original congressional proposal. In addition to this “temporary” stability fund, the governors’ plan also claims that “the federal government has gone back on its commitment to these programs, in some cases refusing to fully fund [sic] risk sharing programs.” It goes on to propose that “Congress should modify and strengthen federal risk sharing mechanisms, including risk adjustments and reinsurance.”

The claims by the governors defy facts, particularly on reinsurance. The Government Accountability Office concluded last year that the Obama administration violated the law to give insurance companies billions more dollars in reinsurance funds than they deserved—prioritizing corporate welfare to insurers over statutorily required payments back to the U.S. Treasury.

But even after the Obama administration violated the law to give insurers billions more than they were due, the governors still feel the need to propose two separate “stability” (read: bailout) funds to prop up Obamacare. It demonstrates the massive “cash suck” that Obamacare has placed on the federal fisc.

An Impractical Proposal on Federal Employee Coverage

The plan also suggests that Congress should “allow residents in underserved counties”—defined as those with only one insurer on the exchange—“to buy into the federal employee benefit program, giving residents in rural counties access to the same health care as federal workers.”

This talking point—and it sounds like little more than a talking point—appears a solution in search of a problem, for several reasons. First, the Federal Employee Health Benefits Program (FEHBP) has very high premiums for federal workers, masked by massive federal subsidies. To provide some context, the Blue Cross Blue Shield Standard Option—the most popular option in FEHBP—has a monthly premium for 2017 of $709.93 for an individual. That total stands nearly 50 percent higher than the average $476 monthly premium paid by exchange participants this year. And the cost of a family plan for the Blue Cross Blue Shield Standard Option in FEHBP—$1,645.48 per month, or $19,745.76 annually—exceeds the cost of most cars.

FEHBP has such high premiums because it provides far richer benefits than the Obamacare exchanges. A 2009 Congressional Research Service report found that the Blue Cross Blue Shield standard option pays an average percentage of health expenses—in technical terms, the plan’s actuarial value—of 87 percent. By contrast, Obamacare links its insurance subsidies to the second-least-costly silver plan, which has an actuarial value of 70 percent.

Because the federal employee plan provides such generous coverage, opening it up to exchange customers would necessitate massive new increases in subsidies, which the governors’ plan also alludes to (“provide adequate and effective subsidies”). Combined with the reinsurance and cost-sharing reduction payments, it amounts to propping up Obamacare on taxpayers’ dime.

Millions of Americans found out in 2013 that when it comes to Obamacare, if you like your plan, you may not be able to keep it. But with respect to both Obamacare and the governors’ proposal, regardless of whether you like the plan, you’ll definitely be required to pay for it.

This post was originally published at The Federalist.

Obamacare, the Constitution, and “Sabotage”

An inside look at an Oval Office meeting between President Trump and Democratic leaders…

 

Donald Trump:           Nancy, Chuck, so good to see you. I wanted to bring you some good news: We’re starting construction on the border wall tomorrow.

Nancy Pelosi and Chuck Schumer:             What? Congress hasn’t appropriated money for the wall. And Congress has the “power of the purse,” not you. How can you say you’ll build the wall when we haven’t signed off on the funding?

Trump:            Because Barack Obama did it for years. What about his actions on Obamacare?

Pelosi:              What do you mean, what about Obamacare? It’s the law of the land—and you should stop sabotaging it!

Trump:            By “sabotaging Obamacare,” you mean failing to spend money on the cost-sharing subsidies to lower deductibles and co-payments…

Pelosi and Schumer: Right!

Trump:            …even though the text of Obamacare itself nowhere includes an appropriation for those subsidies…?

Pelosi and Schumer: Ummm…

Trump:            Let me get this straight: You’re accusing ME of sabotage, because YOU “forgot” to include an appropriation in Obamacare for more than $10 billion per year in spending?

Pelosi:              But “everyone understood” the law provided an appropriation…

Trump:            Even though you couldn’t be bothered to write it down?

Pelosi and Schumer: Ummm…

Trump:            Did either one of you—or for that matter, any Democrat—actually read the bill before voting for it?

Schumer:         I meant to, I swear! But Max Baucus said he hired the best experts, so we didn’t think we needed to.

Trump:            Didn’t those experts read the bill?

Schumer:         They spent all their time cutting deals to get the bill passed. Those Cornhusker Kickbacks don’t write themselves, y’know!

Trump:            Well, your loss is my gain. I’ve read some of the documents in the lawsuit over the cost-sharing subsidies. Do you know that the Obama Administration argued that the structure of the bill implied an appropriation, even though one doesn’t exist…?

Pelosi and Schumer: Yes…

Trump:            And Nancy, you remember the amicus brief you filed in the case right before my election, which said that the courts are “certainly not” the venue for litigating cases when the executive invents an appropriation, as it did with the cost-sharing subsidies…?

Pelosi:              But…but…but…

Trump:            That means I can argue that there’s an appropriation behind any law Congress has passed—like the bill you voted for, Chuck, authorizing construction of the border fence…

Schumer:         What?

Trump:            …And you can’t go to court to stop me!

Pelosi and Schumer: But you requested funding from Congress—and we refused to grant it!

Trump:            You mean, like Congress refused to appropriate funds for the Obamacare cost-sharing reductions, after President Obama requested them…?

Pelosi and Schumer: Ummm…

Trump:            The Obama Administration testified before Congress that it had the authority to spend money on the cost-sharing reductions because Congress didn’t explicitly stop them from spending it, correct?

Schumer:         Yes…

Trump:            And Nancy, your brief said the same thing: That unless Congress explicitly prohibits a President from spending money, the President has free rein to do so…

Pelosi:              But I was trying to protect Obamacare from sabotage!

Trump:            Did you take an oath to support and defend the Constitution, or to support and defend Obamacare?

Pelosi and Schumer: There’s a difference?

Trump:            Yes—and here it is. Thanks to President Obama’s precedent, I can make up whatever appropriations I want—and by your own admission, you can’t go to court to stop me. You could in theory enact a bill prohibiting me from spending money on these phantom appropriations. But because I have a veto pen, you’ll need a 2/3rds majority in each chamber to override me. You don’t have a 2/3rds majority, do you?

Pelosi and Schumer: No, Mr. President.

Trump:            Didn’t think so. So I’ll get my funding for the border wall—and increased defense funding to boot. And maybe I’ll find some other appropriations too. I think the structure of Michelle Obama’s school lunch program implies an appropriation for a new chef at Mar-A-Lago…

Pelosi:              You know, Mr. President, maybe we need to re-think our position on these phantom appropriations. I signed that legal brief the week before the election, not knowing who the next President would be. I thought that power would be safe in her hands…

Trump:            WRONG!

Pelosi:              But executive power has its limits—and Congress should jealously guard its “power of the purse,” regardless of which party holds power at the other end of Pennsylvania Avenue. Otherwise, we could see all sorts of unintended consequences from legislation…

Trump:            You mean, we had to pass the bill so that you could find out what is in it…?

Pelosi:              Well played, Mr. President.

Three Ways Kathleen Sebelius Sabotaged the Rule of Law

Of all the people crying “sabotage” when it comes to Obamacare, Kathleen Sebelius might be the most qualified on the subject. Presiding over the disastrous “launch” of healthcare.gov in the fall of 2013, then-Health and Human Services Secretary Sebelius famously testified before Congress: “Hold me accountable for the debacle—I’m responsible.”

Likewise, in her claims this week that the Trump administration “has consistently tried to undermine the law that is the law of the land,” Sebelius knows of which she speaks. She presided over numerous actions that violated the text of Obamacare, and the Constitution, to thwart the will of Congress and undermine “the law of the land”—Obamacare as it was actually written, not as Democrats wished it were written—and the rule of law in general.

1. Unconstitutional ‘Like Your Plan’ Fix

As Sebelius presided over the healthcare.gov “debacle,” the Obama administration faced a serious political crisis. While the federally run exchange melted down, millions of Americans received cancellation notices in the mail, learning that because their plans did not meet Obamacare’s myriad new regulations, they would lose their coverage effective January 1, 2014.

The notices demonstrated the emptiness of Obama’s repeated promises that individuals who liked their plans could keep them—PolitiFact’s “Lie of the Year.” Moreover, the malfunctioning website created the possibility that millions of Americans could lose their existing coverage while having no way to purchase a replacement policy.

In response to the uproar, the Obama administration essentially decided to take the law into its own hands. Sebelius’ department issued a memo saying it would refuse to enforce the law for certain categories of insurance policies, allowing states and insurers the latitude to maintain individuals’ prior coverage. Even supporters of Obamacare like Nicholas Bagley said the administration’s actions violated the Constitution—the executive refusing to enforce provisions of a law it found politically inconvenient.

This space has previously argued that the Trump administration must enforce Obamacare’s individual mandate, despite any opposition to the mandate on policy grounds, given that the executive must faithfully execute the laws—all of them. But given that Sebelius failed to enforce parts of the law as written for political reasons, who is she to argue that Trump cannot do likewise?

2. Illegal Reinsurance Subsidies

The Government Accountability Office last year ruled that the Obama administration “undermined the law that is the law of the land,” as Sebelius alleges of the Trump administration. Specifically, GAO found that the Obama administration illegally prioritized health insurance companies over American taxpayers, funneling billions of reinsurance dollars that should have remained in the U.S. Treasury (to pay for a separate Obamacare program) to corporate welfare payments to insurance companies. After this rebuke from nonpartisan auditors, the Obama administration still made no attempt to comply with the law as interpreted by GAO.

If Sebelius is as concerned about “undermin[ing] the law that is the law of the land” as she claims, she should have publicly demanded that the Obama administration comply with the law, and the GAO ruling. She did no such thing then, and is unlikely to ask the Trump administration to claw back the corporate welfare payments to insurers now.

3. Unconstitutional Payments to Insurers

The Obama administration did not just violate the law in making payments to health insurers, it violated the Constitution as well. The text of Obamacare—“the law that is the law of the land,” in Sebelius’ words—included no appropriation making payments to insurers to reimburse them for cost-sharing reductions provided to individuals. The Obama administration made the payments anyway.

A federal judge ruled against the Obama administration’s actions last year, stating that they violated the Constitution for spending money without an appropriation. While the payments have continued pending an appeal, if Sebelius worries about preserving “the law that is the law of the land,” then she would support implementing the law as written, and stopping the payments immediately, unless and until Congress approves an explicit appropriation.

Ends and Means

Sebelius’ comments show a fundamental disconnect between means and ends. The Obama administration’s actions suggest a concern largely, if not solely, about signing up as many individuals for taxpayer-funded coverage as possible. If achieving that object meant violating the law, or the Constitution, so be it—the ends justified the means.

Sebelius’ real disagreement therefore doesn’t lie with the Trump administration on “undermining the law.” She did plenty of that herself, likely with full knowledge she was doing so. Instead, her true objection lies in the fact that the Trump may have different policy ends than ones she supports.

If Sebelius wants to espouse different policy positions than the current administration, that is her right. But given the ways in which the last administration repeatedly violated Obamacare to suit its own purposes, conservatives should take no lessons from Sebelius on how to avoid “undermining the law.” Physician, heal thyself.

This post was originally published at The Federalist.

How Donald Trump Created the Worst of All Possible Health Care Worlds

Following last week’s developments in the ongoing saga over Obamacare’s cost-sharing reduction (CSR) payments, two things seem clear. First, President Trump won’t stop making these payments to insurers, designed to reimburse them for providing reduced deductibles and copayments to low-income individuals. If Trump’s administration continued to pay CSRs to insurers mere weeks after the Obamacare “repeal-and-replace” effort collapsed on the Senate floor, it should be fairly obvious that this president won’t cut off the payments.

Second, notwithstanding the above, Trump won’t stop threatening to halt these payments any time soon. Seeing himself as a negotiator, Trump won’t cede any leverage by committing to make future payments, trying to keep insurance companies and Democrats in suspense and extract concessions from each. He has received no concessions from Democrats, and he likely has no intentions of ever stopping the payments, but will continue the yo-yo approach for as long as he thinks it effective—in other words, until the policy community fully sees it as the empty threat that it is.

The combination of these occurrences has created the worst of all possible worlds for the president, his administration, and Republicans. Conservatives can, and should, criticize Trump for continuing to violate the Constitution in making the payments. But liberals will also criticize Trump for violating the Constitution only on a piecemeal, month-by-month basis, claiming that the threat to cut off the unconstitutional payments “sabotages” Obamacare.

President Trump Is Savaging the Constitution

From a constitutional perspective, Trump’s approach to CSRs undermines the rule of law. The president referred to the payments in a May interview with The Economist, stating that “If I ever stop wanting to pay the subsidies, which I will [sic].”

But as any conservative will explain (and this space previously outlined), the president cannot stop making any payments unilaterally. The Supreme Court ruled unanimously in Train v. City of New York that if a law makes a constitutional appropriation, the president cannot refuse to spend the money. He must make the appropriation. Conversely, if the law lacks an appropriation, the president cannot spend money—that prerogative lies with Congress, as per Article I, Section 9, Clause 7 of the Constitution.

Judge Rosemary Collyer ruled last May that Obamacare lacks an appropriation for the cost-sharing reduction payments. If the president agrees, he should stop the payments immediately. If the president disagrees, he should continue the Obama administration’s appeal of that ruling, and commit to making payments unless and until the Supreme Court orders him to stop. Instead, the president has treated the payments—and thus the Constitution—as his personal plaything, which he can obey or disregard on his whim.

This Policy ‘Uncertainty’ Has Consequences

From a policy perspective, the president’s dithering—and the continued threats that he has yet to carry through on (and likely never will)—are having an impact. For years, insurers—wrongly—ignored the threat that CSR payments could disappear, even as some individuals publicly warned them of the risk.

Having under-estimated their risk before this year, many insurers have over-estimated their risk now. Carriers have threatened higher premium increases, or reduction in service areas, because they finally recognize the inherent uncertainty around CSR payments lacking an explicit appropriation in statute.

Insurers’ cries of “uncertainty” have joined chorus with liberals’ claims of “sabotage” against the Trump administration. The same liberal groups and advocates who failed to recognize the uncertainty last year—because higher premiums for 2017 would have hurt Hillary Clinton and Democrats during last fall’s elections—now almost gleefully embrace the concept, believing it can benefit them politically.

Therein lies the full scope of the political danger for Trump and Republicans. It seems obvious that Trump will continue to make the payments to insurers. But it seems equally obvious that Trump enjoys keeping insurers on the proverbial short leash, and won’t give them the “certainty” over the payments that they desire. The end result: An administration that receives political blame from the Right for making unconstitutional payments, and from the Left for “uncertainty”-related premium increases, because Trump has not confirmed those unconstitutional payments will continue.

Rule of Law, Not of Men

In many respects, Trump has provided a perfect illustration of the problems inherent in creating a government based on men and not laws. When President Obama decided to violate the Constitution by making CSR payments without an appropriation, he created a scenario whereby any future president could do exactly what Trump appears to relish: Hold the flow of funds as a political cudgel in an attempt to bend people to his desires.

But in an ironic twist, the political benefit from creating this unilateral policy could accrue to Democrats, if Republicans receive fallout from higher premiums in 2018. Perhaps that outcome could persuade both parties to abandon the executive unilateralism that has become far too common in recent administrations. Restoring the rule of law seems like such a simple, yet novel, concept that some enterprising politicians in Washington might want to try it.

This post was originally published at The Federalist.

CBO Report Shows Bogus Nature of Obamacare “Sabotage” Charges

If you need any additional evidence as to the trumped-up (pardon the pun) charges of Obamacare “sabotage” leveled against the current president, look no further than the Congressional Budget Office (CBO) report about cost-sharing subsides released yesterday. In the report, CBO concluded that ending subsidy payments—which the law never appropriated to begin with—would keep premiums roughly constant for most individuals, increase spending on insurance subsidies, and increase the number of insured Americans modestly.

Which one of those outcomes do Democrats oppose? Exactly none. Which illustrates why all the self-righteous indignation about President Trump “sabotaging” Obamacare is as much about the individual inhabiting the Oval Office as it is about health care policy.

Check the Cost-Sharing Analysis

The CBO report, as with other prior analyses, assumed that eliminating the cost-sharing reductions—used to reimburse insurers for providing discounted deductibles and co-payments to certain low-income households—would lead insurers to raise premiums, but only for certain plans. Because the law requires insurers to lower cost-sharing regardless of whether the federal government provides separate reimbursement payments for that, insurers would “load” those reductions on to silver insurance plans—but only on insurance exchanges. This change would exempt plans sold off the exchanges, where individuals do not qualify for subsidies, from the higher premium effects.

The higher premiums for silver plans on exchanges would lead to higher spending on insurance subsidies, which Obamacare links to the second-lowest silver premium. And those richer subsidies would attract some more individuals to insurance markets, reducing the number of uninsured by about one million.

Democrats may seize upon CBO’s finding that this scenario would increase the deficit as reason to oppose it. But if Democrats cared about protecting taxpayers, they would have objected to the Obama administration’s actions—actions that the Government Accountability Office concluded last year violated the statute—placing insurance companies ahead of ordinary taxpayers in receiving reinsurance payments. They didn’t object on behalf of taxpayers then, so why object in this case? Is it really about policy, or is it just crass politics?

Liberal Hypocrisy on the Individual Mandate

Likewise, liberals charge that the president could refuse to enforce Obamacare’s individual mandate, encouraging healthy people to drop coverage and causing insurance markets to deteriorate further. In reality though, his room for maneuver is more limited. If the president decided to issue blanket exemptions to the mandate, or not enforce it, insurers likely would sue the administration for failing to execute its constitutional duties—and they could, and should, win. Under our Constitution, the president can, should, and must enforce all the laws, including the mandate, not just the ones he agrees with.

Given their own party’s history with the mandate, liberals’ sudden insistence on its “enforcement” sounds more than a bit rich. Democrats were the ones who, when faced with the fact that non-compliance with the mandate could lead to jail time, expressly wrote the law to prevent the use of such enforcement mechanisms. And the last administration was, if anything, far too liberal with hardship exemptions to the mandate, giving them to individuals who received a notice from a utility threatening to shut off service, or those who had a close family member die in the past three years.

So is the issue with President Trump’s supposed non-enforcement of the mandate, or the fact that he’s the one making decisions on exactly how the mandate will be enforced?

Pester People into Enrolling

The Trump administration could certainly influence insurance markets through outreach efforts. Liberal groups have spent weeks complaining that the Department of Health and Human Services has not solicited them for this fall’s open enrollment season.

But put things into perspective. A Politico story in January noted that the Trump administration reduced television advertising by about $800,000 per day for the last four days of open enrollment—a few million dollars. If Obamacare—entering its fifth open enrollment period this fall—is so fragile that losing a few million dollars of advertising will tank insurance markets, what does that say about the stability, let alone the wisdom, of the law in the first place?

The federal government shouldn’t need to spend millions of dollars every year pestering people into enrolling in coverage, not least because insurance companies can and should do that themselves. President Trump should enforce the law as it’s written—a novel task compared to his predecessor, who seemingly relished in re-writing it unilaterally—but sabotage? Democrats sabotaged the law themselves when they passed it seven years ago, and no amount of opportunistic (and disingenuous) rhetoric can change that fact.

This post was originally published at The Federalist.

Restoring the Rule of Law to Obamacare

Over the last several months, this space has highlighted that President Trump has an opportunity and a challenge: Restoring the constitutional rule of law his predecessor often ignored. Such a move would require ending the Obama administration’s ad hoc rewriting of Obamacare, implementing the law as written—no more, no less.

Into that debate stepped the Conservative Action Project on Friday, with a memo noting that the president can and should lead on Obamacare. The title suggests a continuation of Obama’s “pen and a phone” mentality, emphasizing executive unilateralism in the face of Congress’ inability to pass “repeal-and-replace” legislation regarding Obamacare.

So Far Trump Is Perpetuating Obama’s Law-Breaking

The document contains numerous important suggestions to undo President Obama’s illegal executive acts. For instance, it encourages Trump to “take action to end the illegal and unconstitutional cost-sharing subsidies to the insurance companies,” ending their disbursement. This development would be not only welcome, but far overdue.

For more than six months President Trump has continued his predecessor’s habit of violating the Constitution to disburse billions of unappropriated dollars to insurance companies. To both enforce the rule of law and end crony capitalist dealings between “Big Government” and “Big Insurance,” Trump should end the unconstitutional subsidies forthwith.

The CAP letter also rightly calls on Trump to “end the illegal diversion of money from the U.S. Treasury to insurance companies.” The Government Accountability Office ruled last September that the Obama administration had violated the text of Obamacare by prioritizing reinsurance payments to insurers over required payments to the Treasury. As with the cost-sharing subsidies, President Trump should put the rule of law—and taxpayers—ahead of insurance companies’ special interests.

The CAP document calls for President Trump to “continue to fight for repeal of the individual mandate,” but—thankfully—does not call for Trump to defang the mandate unilaterally. As I wrote back in January, when administration officials first suggested they may not enforce the mandate at all, “a Republican Administration should not be tempted to ‘use unilateral actions to achieve conservative ends.’ Such behavior represents a contradiction in terms.”

You Can’t Ignore the Law Because You Don’t Like It

In this same vein, CAP’s call for the Trump administration to “expand the exemption for so-called ‘grandmothered’ plans” represents an open invitation for the president to violate the Constitution, just as his predecessor did. These “grandmothered” plans should have been cancelled in January 2014, as they did not—and do not—comply with the new statutory requirements included in Obamacare.

In late 2013, President Obama faced political controversy for his “If you like your plan, you can keep it” broken promise, which became PolitiFact’s Lie of the Year. To stanch his political bleeding and solve the problem of millions of cancellation notices—along with a broken website preventing individuals with cancelled plans from buying new ones—Obama tried to pass the proverbial buck. He said his administration would allow states, if they chose, to let individuals keep their plans—temporarily. This purportedly “temporary” solution has been extended numerous times, and now is scheduled to expire at the end of 2018.

Unfortunately, as law professor (and Obamacare supporter) Nicholas Bagley has noted, Obama’s unilateral creation of these “grandmothered” health plans violated his constitutional duties as chief executive: “The Administration thus used the public pronouncements of its non-enforcement policies to encourage the regulated community to disregard provisions of [the law]. Prospectively licensing large groups of people to violate a congressional statute for policy reasons is inimical to the Take Care clause.”

To put it more bluntly, the president cannot decline to enforce the law because he finds himself in a political jam, whether due to a broken promise, a non-functioning website, or mere disagreement with the law in question. That principle applies as equally to President Trump as it does to President Obama. Trump’s extension of “grandmothered” plans violates the Constitution as much as President Obama’s did—and expanding those plans to include other forms of insurance would represent a further violation.

To be clear, as a matter of policy, I hate the idea of cancelling millions of insurance policies because they do not meet Obamacare’s myriad regulatory requirements. But as I noted recently, I believe President Trump should do just that—not because I support that outcome, or because President Trump supports it, but because the law requires it. He should have done that months ago—within days of taking office—to make clear that the cancellations stemmed from President Obama’s violation of his own health law, not any measure Trump himself wanted to implement.

Unfortunately, however, President Trump has yet to enforce the law, or the Constitution, when it comes to Obamacare, having undone none of his predecessor’s illegal and extralegal acts. For this conservative, hope springs eternal, as tomorrow always brings another opportunity to do the right thing. Here’s to this administration finally realizing that the rule of law by definition means enforcing the laws one disagrees with—for that critical principle exceeds the value of any particular law, no matter how onerous or obscure.

This post was originally published at The Federalist.

“Problem Solvers’” Obamacare Solution: Single Payer

On Monday, a bipartisan Problem Solvers Caucus in the House released their list of “solutions” regarding Obamacare. Developed over the past several months, the list can easily be summed up in a single phrase: Single payer.

The lawmakers didn’t come out and say as much, of course, but that would be the net result. In funding more bailout spending for insurers, the proposal clearly states that Obamacare is “too big to fail”—that no amount of taxpayer funding is too great to keep insurers offering coverage on the health exchanges. Enacting that government backstop would create a de facto single-payer health-care system—only with many more well-priced insurer lobbyists around to demand more crony capitalist payments from government to their industry.

Cost-Sharing Reductions

Suppose for a minute that a burglar comes into your house late at night and tries to steal your belongings. Upon apprehending the suspect, the burglar tells you that he only stole your property because he’s hungry and struggling to provide for his family.

In this scenario, how likely would you be just to give the burglar your property, so he could have the resources he needs? Probably not very. On the one hand, that would solve the burglar’s immediate problem, but the burglar broke the law—and ignoring that offense will only encourage future law-breaking.

That’s essentially the scenario facing Obamacare’s cost-sharing reduction payments, meant to subsidize discounted co-payments and deductibles for certain low-income individuals. Obamacare didn’t include an actual appropriation for the payments, so Barack Obama just made one up that didn’t exist. In essence, he stole both the constitutional spending power of Congress and taxpayer funds—recall that spending money without an appropriation is not just a civil, but a criminal, offense—to get Obamacare started.

Yet Congress seems far more worried about propping up Obamacare than holding President Obama to account—focusing solely on the outcomes to individuals, while caring not a whit for the effects on the rule of law. The Problem Solvers Caucus plan includes cost-sharing reduction payments with no accountability for the Obama sdministration’s flagrant violation of the Constitution.

Ironically, Tom Reed (R-NY) and other Republican members of the Problem Solvers Caucus voted in 2014 to authorize the lawsuit that declared the cost-sharing payments unconstitutional last year. But do Reed and his other colleagues actually want to do anything to enforce that lawsuit, and preserve the Constitution that they swore to uphold? Not a chance.

Reinsurance

The Problem Solvers Caucus plan also includes “stability fund” dollars designed to subsidize insurers for covering high-cost Obamacare enrollees. But here again, the proposal throws good money after bad at insurers, creating a new government program after non-partisan auditors concluded that insurers illegally received billions of dollars from the last federal bailout.

Last September, the Government Accountability Office (GAO) concluded that the Obama administration illegally funneled billions of dollars in reinsurance funds to health insurers rather than the U.S. Treasury. After taking in “assessments” (read: taxes) from employers, the text of Obamacare itself requires the government to repay $5 billion to the Treasury (to offset the cost of another Obamacare program) before paying health insurers reinsurance funds.

But when employer “assessments” generated less money than originally contemplated, the Obama administration put insurers’ needs for bailout funds over the law—and taxpayers’ interests. GAO found the Obama administration’s actions violated the law, costing taxpayers billions in the process.

As with the cost-sharing reduction payments, the Problem Solvers Caucus would give insurers even more money, while ignoring the prior illegal—and unconstitutional—acts that benefited health insurers under the Obama regime. In so doing, the Problem Solvers proposal would create another big problem, by incentivizing future presidents to keep breaking the law to advance their political agenda.

Throwing Money at Problems

In general, the Problem Solvers Caucus attempts to solve problems by throwing money at them, by paying tens of billions of dollars (at minimum) to insurers. But as Margaret Thatcher pointed out four decades ago, socialism always runs out of other people’s money—a problem that the proposal wouldn’t solve, but worsen.

The Problem Solvers Caucus proposal amounts to little more than an Obamacare TARP—that’s Turning Against Repeal Promises (or Taking Away Repeal Promises, if you prefer). In abandoning the repeal cause, and setting up a federal backstop for the entire health-care system, the plan would create a de facto single-payer health-care system. Bernie Sanders would be proud.

This post was originally published at The Federalist.