By Propping Up Obamacare With Illegal Payments, Trump Is Eroding the Rule of Law
The president is using unconstitutional insurer subsidies as negotiating leverage.
For a prime example of how the poorly conceived policy of Obamacare interacts with the Trump administration's disregard for the rule of law, look no further than the debate over the health law's subsidy payments to health insurance companies.
Over the last several months, as Republicans have struggled with legislation to repeal and replace Obamacare, President Trump has repeatedly warned that the health care law is already failing. If Congress did nothing, he said last week, he would let it "implode." That may sound passive, but coming from Trump, it was an active threat to hasten the law's demise.
Since taking office, the president has dangled the possibility that his administration might cut off payments being made to insurers as part of Obamacare—money that insurers say is vital to stabilizing the health law's insurance exchanges. Over the weekend, he raised the idea again, tweeting that, should Congress fail to act, bailouts for insurance companies "will end very soon."
The threat is meant to be leverage to force a recalcitrant Congress to act. In fact, it's a reckless move, because the payments are illegal and never should have been made in the first place.
As surface politics, Trump's threat is poorly chosen—cutting off the payments would cause premiums to rise. As policy and precedent, it's even worse—these payments are unconstitutional, and Trump's threats suggest he believes he has the legal authority to choose whether or not to make them.
The debate over these subsidies offers a window into how the failings of Obamacare, the weaknesses of Congress, and the Trump administration's policy bluster are interacting to the detriment of the rule of law. But to understand the larger implications, it helps to know a little bit about the interlocking subsidies and side payments called for under the health care law.
The payments in question are known as cost-sharing reduction (CSR) subsidies. Health insurers operating under the law are required to reduce deductibles and copayments for individuals who make less than 250 percent of the poverty line, a group that encompasses a little more than half of enrollees. The federal government then pays insurers directly in order to cover the cost of further subsidizing this population.
These subsidies come in addition to the insurance subsidies that Obamacare offers to people earning up to 400 percent of the poverty line. Essentially, it's an additional layer of financial assistance designed to reduce the out-of-pocket cost burden that even Obamacare's already subsidized insurance places on the near poor.
The CSR payments provide a considerable boost to health insurers' bottom line: about $7 billion last year, and an expected $10 billion this year. By 2026, the payments are expected to total about $130 billion.
Unsurprisingly, health insurers are keen to keep them going. Their argument for continuing the payments is fairly straightforward: They are part of the statute of the Affordable Care Act. Under the law, insurers would be required to offset the out of pocket costs for lower-income people regardless of whether the CSR subsidies are paid. So insurers would almost certainly sue to regain the payments if Trump cut them off. If the payments are not made, insurers say they will raise premiums in order to compensate.
The important complication is that even though the payments are written into the law, money to pay them was never appropriated by Congress. Under the Constitution, Congress must appropriate money in order for the executive branch to spend it.
The Obama administration explicitly asked for a Congressional appropriation of money for the CSR payments, but Congress never provided it. The administration then made the payments anyway, and the Trump administration has so far continued the practice.
Under the Constitution, however, only Congress has the power to appropriate funds. In 2014, House Republicans sued the Obama administration for exceeding its constitutional authority by spending money on the payments without authorization and thereby usurping the congressional power of the purse. The Obama administration argued that it was required to follow the text of Obamacare.
In May of last year, a federal judge agreed with House Republicans. U.S. District Judge Rosemary Collyer ruled that the Obama administration had unambiguously overstepped its authority in making the payments without an explicit fiscal go-ahead from the legislative branch. "Congress authorized reduced cost sharing but did not appropriate monies for it, in the [fiscal year] 2014 budget or since," she wrote in her decision. "Congress is the only source for such an appropriation, and no public money can be spent without one." However, Collyer also stayed her decision in order to give the Obama administration time to appeal.
The lawsuit would have continued under a Hillary Clinton administration. But Donald Trump's win in November threw its status into uncertainty. Since the election, both the Trump administration and House Republicans have asked for and been granted delays. They now suggest they would like to resolve the matter out of court.
Many insurers are already losing money in the exchanges and are skittish about the future of Obamacare. The lack of certainty about whether CSR payments will continue to be made has caused them to hedge their bets by raising premiums. This is politically unpopular, and as a result, both Republican and Democratic members of Congress have indicated that they want to see the CSR subsidies paid in order to stabilize the jittery Obamacare exchanges. Trump, of course, has refused to commit one way or another, saying explicitly on several occasions that he hopes the threat of cutting off the payments will bring Democrats to the negotiating table, or push Republicans in Congress to act.
The result is a cascade of linked policy and political failures, in which partisan convenience has trumped both good sense and constitutional duty at nearly every turn.
The original health care law, which was passed over the unanimous objections of the opposing political party, was designed to work only if future lawmakers acted from a position of total political support by authorizing money to make the CSR payments. The Obama administration then chose to implement the law in a way that defied Congress and exceeded its constitutional authority.
Many Republicans in Congress now apparently want to keep making the CSR payments in order to not undermine the exchanges. Even Mitch McConnell has said that, in the absence of a repeal bill, the markets must be stabilized. But GOP lawmakers, despite cautioning Trump against cutting off the payments, have not appropriated money for them via independent legislation (although some are now suggesting that this may be on the table).
Sen. Lamar Alexander said he told Trump personally to continue making CSR payments, per @Siobhanehughes
— Michelle Hackman (@MHackman) August 1, 2017
Meanwhile, the Trump administration has acted in a way that simultaneously increases policy uncertainty while undermining the rule of law. As recently as last week, Health and Human Services Secretary Tom Price, who supported the House lawsuit against the subsidies when he was in Congress, refused to say whether the payments ought to be continued.
This should not be a drawn-out decision, left open for months at a time. Nor should it be treated as a blunt cudgel for gaining political leverage. If Trump and his team truly believe that the CSR payments are unconstitutional, they should have stopped making them immediately.
Susan Collins: "It is absolutely essential that the CSR payments continue."
— Matt Fuller (@MEPFuller) August 1, 2017
Instead, the president has continued to make the payments while openly musing about the possibility of cutting them off in hopes of improving his political bargaining position. In doing so, he has not only caused chaos and instability in the marketplaces. He has effectively taken the position that this is all a matter of executive discretion. It is not. Either the CSR subsidies are statutorily required and clearly appropriated by Congress, or they are not. Judge Collyer's decision on this question was clear: The payments have not been authorized. They should never have been paid.
By refusing to commit, and by treating the payments as optional, Trump is arguably expanding on the errors of his White House predecessor, who at least maintained that he had a legal obligation, based on statute, to make the payments, with or without explicit congressional appropriation.
Trump's decision to hold the CSR subsidies hostage for political gain sets a dangerous precedent that will surely be followed by those who succeed him. What is ultimately at stake here is not only the future of the health care law, but of the constitutional separation of powers and the limits of executive branch authority. Trump's ham-fisted attempt at dealmaking is eroding those limits, and in the long run we are all worse off for it.