Day: March 14, 2017

DACA, unlike DAPA, does not Confer “Lawful Presence”

A federal magistrate is currently considering whether a DACA beneficiary is properly being detained by ICE. In a 46-page decision (via Chris Geidner), the magistrate queried what rights “flow” from DACA’s grant of lawful presence. There is a foundational problem with this analysis. DACA, unlike DAPA, does not confer “lawful presence.” The court’s analysis elides this important question:

Courts have recognized that DACA confers lawful presence. See Ariz. Dream Act Coal. v. Brewer, 757 F.3d 1053, 1058-59 (9th Cir. 2014) (“DACA recipients enjoy no formal immigration status . . . . DHS considers DACA recipients not to be unlawfully present in the United States because their deferred action is a period of stay authorized by the Attorney General.”); Texas v. United States, 809 F.3d 134, 148 (5th Cir. 2015) (“‘Lawful presence’ is not an enforceable right to remain in the United States and can be revoked at any time, but that classification nevertheless has significant legal consequences.”).

This is not correct. Note that the magistrate does not cite Secretary Napolitano’s June 2012 memorandum establishing the DACA program. The phrase “lawful presence” appears nowhere in the memorandum. In contrast, the November 2014 memorandum establishing DAPA expressly noted that it conferred “lawful presence.”

The Arizona Dream Act coalition panel opinion was very careful not to use the phrase “lawful presence,” because it’s holding was that DACA did not confer any sort of lawful status. This passage is instructive:

First, defendants point to the “Frequently Asked Questions” (FAQ) section of the website for the United States Citizenship and Immigration Services. The answer to one of the questions states that although DACA recipients “do not accrue unlawful presence (for admissibility purposes) during the period of deferred action, deferred action does not confer any lawful status.” But the position articulated on this website is entirely consistent with the Executive’s discretionary authority to defer prosecution of some individuals without changing their formal immigration status. The “answer” in the FAQ section lends no support to Arizona because the terms “presence” and “status” are terms of art in the scheme of federal immigration law, and they are not necessarily interchangeable. See Chaudhry v. Holder, 705 F.3d 289, 291 (7th Cir.2013) (“The Board [of Immigration Appeals has] acknowledged that ‘unlawful presence’ and ‘unlawful status’ are distinct concepts.”); Dhuka v. Holder, 716 F.3d 149, 154–59 (5th Cir.2013) (accepting the Board’s distinction between presence and status and rejecting argument that an authorized stay pursuant to 8 U.S.C. § 1182(a)(9)(B)(ii) is equivalent to lawful status). More fundamentally, of course, it cannot be disputed that the FAQ section of a federal website is not a source of “federal law,” nor would an interpretation announced there be subject to deference by a court.

Indeed, FAQs are not sources of federal law. Yet, an all-star cast of attorneys have relied on this FAQ as the basis for DACA bestowing deferred action.

The magistrate judge’s citation to the U.S. v. Texas opinion is a non-sequitur, because that case involved DAPA, which expressly provided lawful presence.


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What Executive Action can HHS Secretary Employ During Phase 2?

The proposed repeal-and-replace process reminds me of a classic South Park episode, wherein the underpants gnomes would steal people’s underpants. Why?  Their business plan was simple.

  • Phase 1: Collect Underpants
  • Phase 2: ?
  • Phase 3: Profit

The AHCA repeal effort follows this plan, literally and figuratively.

  • Phase 1: Use budget reconciliation to enact the American Health Care Act
  • Phase 2: Use yet-unspecified executive action to stabilize markets
  • Phase 3: Repeal the remainder of the ACA with 60 votes in the Senate, and replace it with something else

Like Tom Cotton, I am doubtful that there are enough votes in the House for Phase 1, and am extremely doubtful that there are 60 votes (let alone 51) in the Senate for Phase 3.

To that end, I will focus on Phase 2. Specifically, what sorts of executive action could Secretary Price take, whether those actions would be lawful, and whether anyone would have standing to sue. I apologize in advance for the broken record, but the Obama Administration has already set the precedents for Price to take a whole host of (illegal) executive actions that could immediately alleviate burdens imposed by the ACA.

First, Secretary Sebelius suspended both the individual and employer mandates for millions of Americans and businesses. These actions were completely illegal, and amounted to a failure to faithfully executive the law. Secretary Price could now do the same, on a much larger scale. Everyone who asserts a hardship because of the rising costs of health insurance could now be granted an exemption. Only fools would pay the penalty! Efforts to challenge Sebelius’s suspensions have failed in court. Under these precedents, it is unlikely anyone would have standing to stop Price’s changes. Frankly, I am not too concerned about these actions, because Phase 1 (AHCA) would repeal both mandates in full, so there is little reason to employ further executive action on this front. So those mandates are out. (If we never get to Phase 1, then this option becomes much more attractive).

Second, a far more potent area for executive action concerns the Essential Health Benefits (EHBs). The ACA specifies that EHBs must be “equal to the scope of benefits provided under a typical employer plan, as determined by the Secretary.” As Nick Bagley points out, there may be some flexibility about how the Secretary can define “typically,” but there is another constraint in the statute: the Chief Actuary of CMS (who is not a political appointee) must sign off on the recommendations. Further, even if the Actuary signs off (unlikely), any such changes would have to be made through the cumbersome notice-and-comment process. Various groups could file administrative challenges to the rule-making, which would hold it up forever.

There is a much more potent approach: Price can do what Sebelius did before, and simply decline to enforce the mandates. The if-you-like-your-plan-you-can-keep-you-plan administrative fix allowed insurance companies to continue selling otherwise void plans, that do not cover EHB. How? HHS simply announced  that it would never make the finding that non-compliant plans are being offered. As I discuss in Unraveled, this decision was completely illegal:

Traditionally, states were responsible for regulating their own insurance markets. The federal government could not force, or commandeer, the states to implement Obamacare. As a result, the ACA gave states two choices. First, each state could voluntarily enforce these eight requirements within its borders. Second, if a state declined, HHS must enforce the requirements in its place. The statute provides that if HHS makes a “determination” of nonenforcement by a state, “the Secretary shall enforce” the eight requirements. Under the ACA, states were given the first opportunity to enforce the mandates, but if they declined, HHS would do it for them. In West Virginia, neither would happen. . . . The statute provides that HHS “shall enforce” the eight requirements – shall means must. President Obama told HHS not to enforce the requirements, even if a state failed to do so, because it resulted in the cancellation of plans.

Here is how the SG described the policy in a recent brief:

To avoid that result, HHS announced a transitional policy under which it would not enforce certain ACA requirements against health insurance issuers in the individual and small-group markets that continued to offer coverage that would otherwise have been can- celled because it did not comply with those requirements, provided that the issuers met certain conditions. Pet. App. 183a-187a. HHS encouraged States to adopt the same transitional policy, but each State remained free to decide whether to enforce the relevant ACA requirements. Id. at 187a.

By never making the determination that non-compliant plans were being offered, HHS effectively suspended the EHB mandate. It was entirely illegal. (See Nick Bagley’s analysis in the New England Journal of Medicine). West Virginia challenged this action in court. The D.C. Circuit dismissed the case on standing grounds, finding that the state suffered no injury. Like with many of President Obama’s benevolent suspensions that alleviated burdens, courts found no standing.

Alas, using this precedent, Secretary Price can likewise decline to enforce the EHBs–but to a much greater extent. Instead of allowing old, non-grandfathered plans to be sold, the Trump Administration can tell insurance companies that they can sell entirely new thrifty plans that do not cover all EHBs. Why? There is a hardship due to the lack of plans on the exchanges, and HHS determined that selling additional plans are essential as a transitional policy to stabilize markets. Whatever.

There is one wrinkle to this plan. West Virginia’s petition for certiorari is currently pending before the Court, and after a call for a response, the SG filed a BIO  (I think this is the first brief the Trump Administration has filed in support of Obamacare). The case should be up for conference in about three weeks or so. Perversely, a ruling for West Virginia here would enable other liberal states to stop Trump’s executive action with respect to the ACA. More generally, it would bolster the notion of state standing–the virtues of which California and Washington have recently re-discovered. This could gin up four votes for cert that were lacking before. One caveat: Price’s executive action would only work in the states that decline to enforce their own markets. Most liberal states, which enforce their own markets, would not be injured by this change. Perversely, the states most likely to disfavor the policy would be least able to challenge it in court.

There may be one additional ground for standing though. If small insurers decide to sell plans that do not provide EHB, other insurers in the marketplace may file suit, based on what is known as “competitor standing.” That is, competitors are injured because the government is failing to faithfully execute the law, thus creating an unfair marketplace. That would put the legality of the fix front-and-center. I am doubtful any insurer would risk such a suit, because they all benefit from this illegal largesse. All of the insurers will continue selling non-compliant plans under the administrative fix, which was recently extended till 2018. Secretary Price would likely face few, if any legal obstacles to using this plan.

There is a third executive action, that has (likely) already begun: the payment of cost-sharing reductions. Recall that last year, D.D.C. found that the Obama administration was spending money that was never appropriated, in the form of cost-sharing reductions. There is a worthwhile debate about whether the House of Representatives has standing, but much less debate about whether the payments are legal. (I think it is an open-and-shut case of appropriations law, but I’ll defer that discussion in this post). Leading up to the inauguration, I pondered whether the Trump Administration would cease making these payments. After all, the Donald is not afraid to stiff people on bills.

As best as I can tell, the illegal payments have continued. I cannot find any evidence that the monthly payments are being made, but I am certain that if they were not being made, the insurance industry would be crying foul. Here, the dog didn’t bark. In all likelihood, the Trump HHS has already continued one of the most flagrant violations of law that was begun by the Obama Administration.

I had sincerely hoped that after eight years of lawlessness from the Obama administration, the new government would have a stronger commitment to the rule of law and the separation of powers. Phase 2 will serve as a the test of how deep that commitment is.

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CBO’s AHCA Estimates are Premised on the Effectiveness of the Individual Mandate, Which Has Not Worked

Five years have elapsed from the Chief Justice’s saving construction in NFIB v. Sebelius, and we are still debating  the ACA’s individual mandate. The Congressional Budget Office predicted that because the AHCA eliminates the individual mandate–replacing it with a continuous coverage provision–14 million people will choose to go uninsured in 2018. Specifically, 6 million will drop out of the individual market, 5 million will leave Medicaid, and 2 million will drop their employer-based coverage. That is, because these 14 million people are no longer facing a penalty for going uninsured, they will instead make the choice to go uninsured. CBO’s estimates are premised on the notion that the individual mandate has been effective at nudging people into the insurance market. History does not support this presumption.

First, the individual mandate has not been effective. Don’t take my word for it. Listen to Jonathan Gruber. The mogul of MIT wrote in the New England Journal of Medicine, “When we assessed the mandate’s detailed provisions, which include income-based penalties for lacking coverage and various specific exemptions from those penalties, we did not find that overall coverage rates responded to these aspects of the law.” The mandate is simply not high enough to be an effective cudgel. Health care analysts always predicted that the penalty would ultimately be raised. Jonathan Gruber explained, “I think probably the most important thing experts would agree is we need a larger mandate penalty.” But, as I noted in my first book, doing so could run afoul of the Chief’s saving construction. In any event, in light of the numerous “special” enrollment periods, people who wanted to gain coverage have been able to gain it. The mandate hasn’t worked.

Second, the individual mandate has not been enforced. Rather, due to a series of illegal executive actions, millions of Americans have been exempted from the mandate, yielding instability in the individual marketplace. And don’t take my word for it. Listen to Solicitor General Donald Verrilli, who warned the Supreme Court that the ACA operating without an individual mandate would “create an adverse selection cascade,” the dreaded death spiral, “because healthy individuals would defer obtaining insurance until they needed health care, leaving an insurance pool skewed toward the unhealthy.” Without the mandate, Verrilli wrote, “premiums would increase significantly” and “the availability of insurance would decline.” This implosion, the government explained, was “exactly the opposite of what Congress intended in enacting the Affordable Affordable Care Act.” The mandate was essential for nudging the uninsured into the health care market. Yet, the mandate would never go into effect as designed. The government’s numerous exemptions from the mandate’s penalty risked the very parade of horribles the government warned about. As I noted in a post earlier this week, the enrollment in the individual marketplace has been nearly half of CBO’s estimates, in part due to the illegal exemptions provided by the Obama administration.

Third, CBO’s estimates that five million people will drop out of Medicaid is bizarre. Avik Roy explains:

Remember that Medicaid is basically free to the eligible enrollee. There are no premiums, and almost no co-pays or deductibles. The value of the Obamacare Medicaid subsidy is about $6,000 per enrollee per year. And yet, CBO believes that 5 million people will only enroll in Medicaid because the individual mandate forces them to. Given the difficulties in enforcing the mandate for low-income populations, this is highly unlikely.

Think about it. How would the IRS enforce the individual mandate for people near the poverty line, who rarely owe income taxes, and often don’t file tax returns, thereby limiting the IRS’ ability to collect a fine?

I don’t pretend to have the actuarial chops to parse every line of the CBO report, but to the extent their models are premised on the effectiveness of the individual mandate, the estimates are belied by history.

At bottom, the mandate as drafted has not been as effective as planned.


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A Victory for Disability Rights and the Constitution

(Cross-posted at Cato at Liberty with Ilya Shapiro)

For months, we’ve been following the saga of a misguided agency regulation that would have deprived some of the most vulnerable Americans of their basic due process rights. In May of last year, the Obama administration proposed a rule designating everyone who uses a “representative payee” (usually a friend or relative) to aid in filing social security disability forms as “mentally defective.” The practical consequence of such a change is that those deemed “mentally defective” (itself a vague and insulting term from a bygone legal era) will automatically fail their federal background check if they attempt to buy a gun. This presumption of unfitness can only be overcome after a lengthy, years-long bureaucratic process to prove one’s own competency.

We’ve written extensively on why this rule is prejudicial and unfair. During the rule’s “notice and comment” period, Cato’s Center for Constitutional Studies submitted its first-ever public regulatory comment, objecting to the rule on 10 different grounds. We pointed out that the rule is vastly overbroad, since those filers who use a “representative payee” include anyone the Social Security Agency believes “would be served thereby … regardless of the legal competency or incompetency of the individual.” Moreover, the rule is counterproductive even when applied to those who do suffer from a psychiatric disability, because those people are more likely to be the victims of violent crimes rather than the perpetrators. Finally, we explained that the rule violates constitutional due process; the burden of proof must fall on the government before it can deprive an individual of a constitutional right.

But despite these efforts, the Obama administration forged ahead, finalizing the rule two days before President Trump took office. This seemed to be the final chapter of the story. Now, however, we can report a much happier ending, thanks to a vital law called the Congressional Review Act (CRA).

The CRA was enacted in 1996 to preserve the legislature’s role in American policy-making when agencies try to unilaterally create sweeping national rules. The Act requires that agencies must submit every newly promulgated rule to Congress for review. Once a new rule has both been submitted to Congress and published in the Federal Register, Congress has a period of 60 legislative days—about six months of real time in practice—in which both houses can pass a disapproval resolution by simple majority vote (no Senate filibusters or parliamentary stall tactics are allowed). If such a resolution is passed by both houses and signed by the president, the rule in question is abolished, and no similar rule can be enacted in the future except by statute.

Soon after the “representative payee” rule was finalized, a movement began urging Congress to implement the CRA in overturning it. The arguments were bipartisan; one of us (Blackman) joined with authors from the Autistic Self Advocacy Network and the National Disability Rights Network to explain why the rule was terrible for both gun rights and disability rights. Whatever one’s views are on the gun debate in America, both sides could agree that “individuals with a disability should not be scapegoated to advance gun control.”

This campaign caught on. Many of the arguments that we and others had made to agency regulators—to no avail at the time—were echoed by the people’s elected representatives. House Majority Leader Kevin McCarthy, for example, wrote that the rule “would elevate the Social Security Administration to the position of an illegitimate arbiter of the Second Amendment.”

The disapproval resolution passed both houses and has now been signed by the president, putting an end to the rule once and for all.

Elections have consequences. In this instance, it’s satisfying that one such consequence has been the end of a stigmatizing rule that never should have been proposed in the first place. As this case has demonstrated, the CRA has the potential to be an enormously important tool in the fight against misconceived regulations. The “mentally defective” rule is one of three regulations that have already been revoked using the CRA during the Trump Administration, and 11 more could be on the chopping block soon, with disapproval resolutions having passed in at least one house of Congress.

Even if common-sense arguments for the protection of individual rights fall on deaf ears in the federal bureaucracy, the people’s representatives still retain the ultimate power to create federal policy and vindicate those rights. That is the system the Framers designed, and that is the system the CRA helps preserve. For more on the ambitious project to use the CRA to reverse harmful regulations, see Pacific Legal Foundation’s

We thank Cato legal associate Tommy Berry for his help with this blog post.

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