Obamacare

The IRS Warned the Obama Administration That Its Decision to Pay Obamacare Subsidies to Insurers Was Illegal

Tax agency risk officer was shown dubious legal justification in secret 2014 meeting.

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Whitehouse.gov

A recently published deposition from a top tax official provides more evidence that the Obama administration not only acted illegally when deciding to pay Obamacare subsidies to insurers—but that they did so knowing full well that the move was not justified.

First, some backstory: Two weeks ago, a federal appeals court ruled that the Obama administration had illegally paid insurers billions in subsidies under Obamacare. The law's cost-sharing subsidies (which provided an added benefit for people between 100 and 250 percent of the poverty line, are separate from the subsidies that offset the price of insurance premiums) were authorized under the law, but not appropriated by Congress.

Indeed, in 2014, the Obama administration submitted an appropriations request to Congress, but Congress declined the request. The White House went ahead and started paying insurers anyway. The payments amount to about $7 billion this year, and will tally about $130 billion over the next decade. (Payments will continue while the case is appealed.) 

The White House contends that its decision to pay insurers was appropriate, and that these sorts of disagreements are typical, especially with a law as poorly drafted as Obamacare. Republicans in the House, who sued the administration over the funding, argues that the administration knew the move was illegal—that it violated the constitutional separation of powers under which the executive branch can only spend money specifically appropriated by Congress—and went ahead with it anyway.

There's now some very strong evidence that the House's argument is right—and that the IRS warned the administration that they had no authority to make the payments.

In a sworn deposition earlier this month, David Fisher, the Chief Risk Officer to the Internal Revenue Service (IRS), told the House Ways & Means Committee that in a January 2014 meeting with administration officials, he raised some "concern about these payments."

Specifically, he couldn't find any clear and direct support for the administration's decision to make the payments.

In the deposition, Fisher explained that he told administration officials that "there was no clear reference in the section regarding the cost-sharing reduction payments to the Internal Revenue Code in the Affordable Care Act" and that the "cost-sharing reduction payments are not linked to the Internal Revenue Code, as far as I could tell, directly anywhere." 

That lack of a clear link, Fisher said, was unprecedented, and thus would be difficult to defend in the event of an audit. As Josh Blackman noted in an extensive report on the deposition last week, Fisher was, for all practical purposes, warning the administration that there was no valid appropriation. He was warning, in short, that it was illegal.

The administration, however, disagreed. And in that January 2014 meeting, administration officials showed him a memo explaining why. Yet as Carl Hulse of The New York Times notes in a column on Fisher's testimony, the administration's presentation of its rationale was rather unusual.

Fisher and several other IRS officials who had reservations about paying the subsidies, including his superior, were brought to a room in the Old Executive Office Building, where they were shown an OMB memo explaining the administration's position. But they were not allowed to make copies of the memo to take with them. They were not even allowed to take notes on the memo. Fisher says that the IRS staffers present were given no reason why they couldn't keep the memo. Instead, "it was simply stated."

As Fisher, a 10-year veteran of multiple government agencies and administrations, said, this was not at all common. He couldn't recall a single other similar occurrence.

The whole meeting, in other words, came across as strange and secretive, as if the administration might have something to hide.

Perhaps what they were worried about was that they had no real argument. Instead, as Fisher said in his deposition, what the administration had was a "list of small justifications of individual things trying to identify why the administration believed that it was Congress' intent to have the payments for both the Advance Premium Tax Credit and the cost-sharing reduction payment being made in the same manner."

"There was no sort of single, main argument," Fisher said, just a "collection of . . . elements that in total, would draw the conclusion that these payments out of the permanent appropriation would be appropriate."

Notice the final word: Not constitutional. Not even legal. Just "appropriate."

The administration's argument in this case is essentially that even though Congress rejected its request for an appropriation, and even though the health law does not provide them with any clear and discrete appropriate for its cost-sharing subsidies, they can nevertheless cobble together a hazy justification under which it is somehow "appropriate" to do so.

The administration's argument for its actions, in other words, is all but an admission that what it is doing is not legal or justifiable—and that when it comes to Obamacare, it simply doesn't care. 

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  1. How dare you criticize or correct our fist black president? Not only is this racist it is ALL the “ist”s and most “ia”s and “ismim”s

    #blacklivesmattermorethanyours #gov’tisabovethelawyoustupidfuck

    1. With interest and penalties too.

  2. The White House contends that its decision to pay insurers was appropriate, and that these sorts of disagreements are typical, especially with a law as poorly drafted as Obamacare.

    That’s a shot at the health insurance lobby from out of nowhere.

    1. Shot at Pelosi.

    2. So when you don’t bother to read a bill before passing it and you ram it through using parliamentary tricks rather than actual votes, the bill has problems?

      1. No. That’s just the way it works. They have to pass the bills to find out what’s in them. It’s in the constitution.

      2. Of course we ignore what the law actually says. Would you do anything the idiots who drafted it required you to do?

        1. And, who better to give billions of dollars than the health insurance companies. The same people who are already well versed in soaking everyone, for every penny they can charge, just to deny payments on care, that they deem not necessary! The entire plan was doomed to cost ten times the original projected cost. But, they can just make that up by collecting higher premiums and cooking the books to make it look like the insurance companies are paying the bills. I bet they are cheating the hospitals out of full pay, as well. That was the way they handled it before the ACA! When they get to the point that those of us getting subsidies cannot afford the premiums, again, they will change to the single payer. They will figure out a way to include the insurance companies so they don’t go broke so rapidly that the stocks don’t crash on the “investors”. By then they will have figured out the two tiered health care system for the haves and the have not-s! The haves will be cared for, normally, and the have not-s will get the rationed care!

          1. Buzz off, you dead thread-fucking troll…..

            1. ? Constructive comment!

          2. It cost too much for medical care, so to me, the first problem you solve is how much it costs for the medical care itself. The next step should have been to tackle the insurance side and making sure people are covered at the best cost possible.

            When the ACA bill made it illegal to purchase prescriptions from Canada at a much more affordable price, you knew there was something wrong. There is nothing affordable about the ACA! It might make it cheaper for some, but it’s just shifting costs around.

  3. If we had a real congress, impeachment vote and senate conviction would be done on this by the end of the week.

    1. As long as the Democrats are willing to stand with Obama no matter what he does, Congress cannot do anything as conviction requires a supermajority. This comes down to the willingness of the Democrats to justify the means by the ends. It is will to power.

      1. Whether it is as you say, or it is simply a matter of too many Congresscritters (of both parties) being unwilling to have the First Black President also be the first President removed from office, the reality of it all should give anyone pause. Because if he can get away with such behavior exactly what limits would The First Female President be willing to abide?

        And she having such a track record of reticence when it comes to engaging in questionable behavior…

        1. Obama would not be getting impeached regardless of skin color. Congress has been letting the president get away with this kind of stuff (and worse) for 200+ years.

          1. The right won’t do it because they want their guy to have just as much power. They are all statist.

          2. Another entirely plausible explanation. And again, all the more reason to fear an untouchable like Hillary Clinton in the Oval Office.

          3. If the 4th branch (Media) would do a better job of shedding light on subjects like this maybe congress and the president would do a better job?
            But alas, one can dream.

            1. The main stream media has the same puppet masters as the politicians, so they all play in lock step.

    2. If we had a real congress

      Well, there’s your problem.

  4. So they knew this was illegal and they did it anyway? Outrageous! I’m eagerly awaiting the arrests and prison time that are sure to follow this revelation.

    Oh, these are government officials…nevermind.

    1. Yeah. They were put in a very tough spot. On the one hand, this appeared to them to be illegal. On the other hand, isn’t disobeying orders from the president also illegal for officials under executive purview? God, I can’t believe I’m actually feeling bad for IRS officials.

      1. They took the job. Fuck them.

        1. Yeah, they chose the thug life.

      2. “On the other hand, isn’t disobeying orders from the president also illegal for officials under executive purview?”

        Uh, it’s not like they’re in the military; those aren’t “orders”. The worst that happens is you lose your job. Same as any employee who finds his boss’ actions illegal and chooses not to do as directed.
        Your boss tells you to take a bribe? Tough; I quit.

      3. Its illegal to disobey a ‘LAWFUL’ order.
        Oh, that only applies to the enlisted force (mostly). My bad.

    2. It’s not a question of legality, but of constitutionality. And if the courts continue to determine that it violated constitutional rules, so be it, the payments will cease. That’s all that needs be done.

      (there’s your spin)

      1. They will tell the judge the payments have ceased while they continue to make payments, and then tell the judge he has no right to see the payment records because of privacy.

  5. Who is the IRS to speculate on the legality of what the president does? Law is a matter best left to the president’s discretion.

    1. Works for Lois Lerner.

      1. Not even a smidgen of truth to that.

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  8. I managed to get a copy of the memo:

    To: IRS Staff

    From: Office of Management and Budget

    Re: Authority for subsidy payments

    They are appropriate because FYTW.

    1. Should’ve perused the comments before I posted, Oh well, I’m sure we were all thinking it.

  9. The administration’s argument for its actions, in other words, is all but an admission that what it is doing is not legal or justifiable?and that when it comes to Obamacare, it simply doesn’t care.

    It’s the “Law of the Land”, biotches!

  10. Republicans in the House, who sued the administration over the funding, argues that the administration knew the move was illegal?that it violated the constitutional separation of powers under which the executive branch can only spend money specifically appropriated by Congress?and went ahead with it anyway.

    So, how many impeachment worthy offenses does this make now? I’ve lost count. /sarc

    Fisher and several other IRS officials who had reservations about paying the subsidies, including his superior, were brought to a room in the Old Executive Office Building, where they were shown an OMB memo explaining the administration’s position.

    The memo was five words:

    “Because fuck you, that’s why.”

    1. Fisher and several other IRS officials who had reservations about paying the subsidies, including his superior, were brought to a room in the Old Executive Office Building, where they were shown an OMB memo explaining the administration’s position, and were assured that that either their agreement or their brains would be on that memo.

      “We made them an offer they couldn’t refuse.”

  11. It’s good to be king!

  12. I’m not sure which is worse, the Obama Administration basically hinging its argument on their signature piece of legislation being too sloppy for anyone to really figure out, or their pathological obsession with secrecy and spin control.

  13. “It’s a sloppily written piece of legislation, so therefor we should be allowed to do whatever we want.”

    1. The Roberts court has already established that the words of the legislation as written are meaningless.

      1. We have yet to get their opinion on whether gender can simultaneously equal and not equal sex. They’ll probably punt by giving deference.

        “The law says A but the agency says B, that can’t be right – please make a ruling.”

        “Our ruling is you aren’t showing the agency proper deference. FYTW”

      2. At least Scalia called bullshit on that. I sure hope his replacement has the balls to honor the Constitution.

    2. AKA “working as intended.”

  14. But Obama didn’t lie us into Iraq so his friends could make oil money. That’s all that matters. He’s the best president ever because of it.

  15. It’s only $7 billion dollars. It’s the government’s money, anyway. What are you all complaining about?

  16. The IRS Warned the Obama Administration That Its Decision to Pay Obamacare Subsidies to Insurers Was Illegal

    That’s when the “Yeah? So?” executive order was issued.

  17. The ability to spend money without the consent of Congress is one of the bedrocks of our Republic. Denying the king the right to spend money without the consent of Parliament is one of the oldest and most important checks against the monarchy.

    Of all of the illegal things Obama has done, this sets the worst precedent.

    1. When President Trump does it, only then will it be the worst thing ever.

    2. Worse than assumption of the right to execute anyone, anywhere, without judicial review?
      Although the two do go hand-in-hand.

  18. I’m curious how the Obama administration could justify a secret memo related to the legality of paying insurers here. I mean, beyond FYTW. Some court was presumably going to be asking this question at some point, along with Congress. This isn’t some super serious national security issue like a memo allowing the president to bomb Americans on American soil or anything like that.

    Things would be a lot simpler if there was some constitutional review process before a law/rule/regulation/executive order went into effect.

    1. But that would mean you couldn’t do whatever you wanted and then slow walk the court case so 7 years later when its finally decided you’re out of office, and the public is used to it.

  19. Spending money that isn’t appropriated is actually a crime. There’s more than enough of a paper trail here to bring people to trial.

    But, as we all know, Nothing Else Will Happen.

    1. Obama: “The American people care about results, not process.”

    2. And how should anything happen? Republicans don’t have enough of a majority to force this issue.

      It’s a deep flaw in how our system of government is set up: the president can largely ignore Congress and get away with it. It took them a century and a half to figure that out, and another century to ramp up the abuse, but now it’s in full swing, and it’s just going to get worse.

  20. Remember the endless outrage at Yoo’s torture memo?

    This will get 1/100th of the coverage even though its more important, though less exciting to the average joe.

    1. That’s cause this is just a fake scandal, like blaming Bengahzi on a YouTube video, or targeting your political enemies with the IRS.

      God you peanuts are so gullible.

      /sarc

  21. SEE? SINGLE PAYER FOR THE WIN!

  22. If Congress controls the purse strings then how is it can the executive still spend money Congress did not approve? Sounds like there’s a loophole in the process.

    1. As in the good ole’ days, parliament is merely advisory to The King!

  23. From a philosophical standpoint, when does it become a legitimate protest to refuse the shared responsibility payment? Probably never according to the courts. Are there any cases that address this? I know there are some that address when you cannot refuse to pay taxes as a form of protest, but are there any cases that outline when you can legally refuse?

    The answer can’t be “never” can it?

    1. My understanding is that you can refuse to make that payment and nothing will happen. I have yet to try it, since I’m covered and therefore exempt, but at the same time if I wasn’t covered you can bet I wouldn’t pay it in the hopes that it would end up in front of the SC at some point. I’d try the same thing with the TSA, but I’m pretty sure they would just throw me in a spiked pit and cover me with cement.

  24. PHAKE SKANDULL! NOBODY CARES! YOU JUST TEH LIGHTWORKER!

  25. RE: The IRS Warned the Obama Administration That Its Decision to Pay Obamacare Subsidies to Insurers Was Illegal
    Tax agency risk officer was shown dubious legal justification in secret 2014 meeting.

    One is not to question Dear Leader.
    He said early on that Obamacare is not a tax.
    He wouldn’t lie.

    1. Dat’s right, it’s not a tax, it’s a penalty for not following Dear Leader’s mandate. Dear Leader is pro-choice, he chooses what’s best for you.
      Ain’t that nice of Him?

  26. Only top gubmit officials can break the law, it’s in the communist constitution.

  27. Put Obozo in prison for one day for each MILLION dollars illegally disbursed in this matter… no parole.

    He’ll be out by 2373.

  28. The law’s cost-sharing subsidies (which provided an added benefit for people between 100 and 250 percent of the poverty line

    That’s a weaselly way of saying that most households below median income are subsidized.

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