On March 4, Obamacare will make its third trip to the Supreme Court in the case of King v. Burwell. In NFIB v. Sebelius (2012), the Supreme Court narrowly upheld the constitutionality of Obamacare’s individual mandate, but invalidated its Medicaid expansion. In Burwell v. Hobby Lobby (2014), the Court found that Obamacare’s contraception mandate violated the Religious Freedom Restoration Act. However, King v. Burwell is different from its predecessors. Rather than challenging the legality of the law Congress designed, this case challenges the legality of how President Obama has implemented the law–or more precisely, modified, delayed, and suspended it. The Cato Institute and I have filed an amicus brief in this case to alert the Court to the administrative, separation-of-powers, and rule of law violations attending the ACA’s implementation.
Through a series of memoranda, regulations, and even blog posts, the President has disregarded statutory text, ignored legislative history, and remade Obamacare in his own image. This case focuses on tax credits, one of the key pillars of the law that the administration has toppled.
To assist those who lack employer-sponsored insurance, Congress appropriated subsidies for residents of states choosing to create exchanges. Congress could not command states to establish them, so it used the withholding of subsidies as a stick to nudge states in the right direction. The statute expresses this intent in language that is clear as day. Individuals can receive these credits if they are “covered by a qualified health plan . . . enrolled in through an Exchange established by the State.” In other words, if a state fails to establish an exchange, and a resident buys a plan through the federal HealthCare.gov, he would not be eligible for the subsidies. Congress structured these growing pains for the ACA: states that do not establish exchanges would be forced to swallow a bitter pill, and their residents would be denied subsidies. The ACA’s Medicaid expansion plan, which the Supreme Court invalidated, operated with a similar carrot-and-stick approach.
These results were unacceptable to an administration intent on pain-free implementation. The ACA was not designed to expand access to health insurance at all costs. Through its oversimplification of how the ACA works as a whole, the government incorrectly assumes that the 111th Congress shared President’s Obama’s evolving vision of how to expand access to healthcare. This bird’s-eye view of the forest ignores the trees—all 535 of them. To paraphrase Inigo Montoya, Congress didn’t think “expand coverage” means what the executive thinks it means.
To obviate the uncomfortable compromises Congress reached, the executive again engaged in a lawmaking process, issuing a rule that nullifies the statute. Under the new “IRS Rule,” subsidies would be available in all states “regardless of whether the Exchange is established and operated by a State . . . or by HHS.” As documented in a detailed report by the House Oversight Committee, the executive branch engaged in a multi-agency rulemaking process based on a convoluted series of linguistic contortions without any meaningful analysis of the ACA’s history. At least one government attorney recognized that there “was no direct statutory authority to interpret [a federal] exchange as an ‘Exchange established by the State.’” But such concerns were squelched, and the rogue rule was released.
Through the IRS Rule, the executive emulates Humpty Dumpty. “When I use a word . . . it means just what I choose it to mean—neither more or less.” Alice asked: “whether you can make words mean so many different things.” Id. The Supreme Court must answer no, and vacate the IRS rule that provides subsidies in states that did not establish exchanges.
Suspension of laws through broad transitional relief, blanket enforcement waivers under the guise of prosecutorial discretion, and regulations without statutory basis are all species of executive lawmaking that violate the separation of powers. Instead of serving as the legislature’s stewards, the administration has consistently disregarded and modified congressional instructions. Executive lawmaking—which has alas become commonplace—poses a severe threat to the separation-of-powers principles that undergird the Constitution and ultimately the rule of law itself. This problem is endemic, but not limited, to the ACA.
- Individual Mandate– Congress scheduled the individual mandate and its accompany penalty to go into effect on January 1, 2014. However, after its “minimum essential coverage” provision resulted in the cancellation of millions of policies, the President modified, delayed, and suspended the law. Through a letter, the government (1) advised insurers that they could sell non-compliant plans, (2) exempted consumers who bought these non-compliant plans from the mandate/penalty, (3) “encouraged” states to allow insurers to offer non-compliant plans, and (4) barred HHS from serving as a congressionally mandated backstop in the event that steps 1-3 happen. All this happened while the president threatened to veto a two-paragraph bill that would have lawfully accomplished all the above. These executive actions thwarted the very goals Congress articulated. The so-called “administrative fix” is subject to a challenge by the West Virginia.
- Employer Mandate– Congress scheduled the employer mandate and its accompanying penalty to also go into effect on January 1, 2014 for employers with more than 50 employees. However, after the mandate proved popular among businesses, it too was modified, delayed, and suspended–twice. Through a blog post, the administration initially delayed the employer mandate till 2015. But one year wasn’t enough. A few months later, the administration bifurcated the mandate without any statutory authority. Employers with 50 to 100 full time employees would not be subject to the mandate in 2014 or 2015. In 2015, these smaller businesses would not be subject to the penalty so long as 70% of their employees were offered comprehensive coverage. In 2016, and beyond, no penalties were assessed if an employer covered 95% of its employees. Without any statutory authority, the executive completely suspended the employer mandate for 2014, partially waived it for 2015, and decided that in 2016 and beyond the mandate will never be fully implemented as Congress designed. The delay of the employer mandate is subject to a legal challenge by the U.S. House of Representatives. The President may have said more than he intended, referring to his rejiggering of the employer mandate as “making a temporary modification to the health care law” that Congress said “needed to be modified.” The President cannot modify the law.
- Obamacare for Congressional Employees– Under Obamacare, Congress required that Members and their staff purchase plans “offered through an Exchange established under” the ACA. This statute was part of Congress’s balanced design to ensure those in Washington would share the experience of Americans unable to obtain cushy federal benefits. Unsurprisingly, this provision proved unpopular among Hill staffers. Initially, the Office of Personnel Management found that it lacked the authority to offer these subsidized benefits to congressional employees. After President Obama became “personally involved,” however, OPM did a regulatory 180 and issued a rule allowing staffers to buy subsidized plans. This rule, challenged in court by Senator Ron Johnson, was flatly inconsistent with statutory text.
- Obamacare for Territories– Congress implemented the ACA in U.S. territories in a way to render their markets unstable. The territories asked the government to exempt them from these onerous provisions. However, On three separate occasions, however, the government explained to the territories that Congress crafted the provisions to “apply . . . in the territories.” In unequivocal terms, the letter concluded that “HHS has no legal authority to exclude the territories from the guaranteed availability provision of the Affordable Care Act. However meritorious your request might be, HHS is not authorized to choose which provisions . . . might apply to the territories.” What a difference a year makes. One year later, HHS did another regulatory 180 and determined “After a “careful review of this situation and the relevant statutory language” that the provisions ““do not apply to the territories.”
President Obama’s philosophy on executive power has unfortunately become all too clear: (1) Congress passes a statute, (2) the statute is inconsistent with the president’s evolving policy preferences, so (3) the administration modifies or suspends enforcement of the law to achieve a result inconsistent with what Congress designed. This dynamic has lurked in the background of every legal challenge to the ACA, as well as the administration’s policy towards immigration (Deferred Action for Childhood Arrivals and Deferred Action for Parental Accountability), the Controlled Substance Act and related banking provisions, the National Defense Authorization Act restricting the release of detainees from Guantanamo Bay, the War Powers Act limiting the duration of “hostilities” in Libya, and others (see Gridlock and Executive Power).
In King v. Burwell, the Supreme Court should address the President’s deliberate indifference toward Congress. A ruling to uphold this behavior sets a dangerous precedent for this nascent superstatute, which will be implemented for years to come by different presidents with different views of the law. More troubling, such a precedent could be used in future to license virtually any executive action to modify, amend, or suspend any duly enacted law.If this President can unilaterally bypass statutes he does not agree with, the structural bulwarks designed by our framers crumble into mere parchment barriers.