On Constitution Day, the Waynesburg University’s Stover Center for Constitutional Studies and Moral Leadership put on a production of a play about Youngstown Sheet & Tube Co. v. Sawyer. Yes, you read that right. A play about Youngstown!  It is titled, “Steeling and Dealing: President Truman’s Seizure of the Steel Mills.” Take a moment to watch it. The first scene shows a debate in the Truman White House about whether he can seize the mills. One adviser says “Why don’t you just steal the steel? You’re the President, you’ve got plenty of executive power. ” The Solicitor General advises, “You can tap into your inherent power.”

Also take a look at some of their previous productions: in 2015, they covered the Federalist Papers, in 2014 they covered Town of Greece v. Galloway, in 2013 they covered Kelo, and in 2012 they covered Lochner.

What a charming an educating program!

Cross-Posted at Volokh Conspiracy.

After six years of pitched political battle, it has become conventional wisdom that Republicans are responsible for the Affordable Care Act’s unraveling. In part, this is true. Specifically, the refusal of red-states to enter the Medicaid expansion, and the defunding of the “risk corridors” have limited the law’s success. However, many of Obamacare’s deepest wounds have been self-inflicted. Out of desperation to ensure as many people as possible signed up for health insurance, the Obama administration has arbitrarily suspended onerous mandates, modified coverage requirements, and extended enrollment periods. These illegal, ad hoc changes to the ACA–which I’ve referred to as “government by blog post“–have unintentionally, but foreseeably weakened the exchanges during the pivotal first three years.

The leading measure of the ACA’s success is the number of people who have enrolled on the exchanges. This table, from the epilogue of Unraveled, illustrates how the law has fallen far short of its great expectations.

In 2014, Obamacare met the CBO’s original goal from 2010, with 8 million enrollments. This was truly a red-letter year for the ACA, demonstrating that there was strong demand for the exchange policies. After 2014, however, the demand has leveled off. In 2015, there were 11.7 million enrollments, far fewer than the CBO’s average forecast of 13.25 million. From 2010 through 2015, CBO consistently predicted that enrollments would spike up in 2016, with 20–24 million enrollments. For example, in its February 2014 report, CBO wrote that “more people are expected to respond to the new coverage options, so enrollment is projected to increase sharply in 2015 and 2016.” The surge never happened. In March 2016, CBO drastically downgraded its forecast by half to 10 million enrollees. As of July 2016, there have been 12.7 million confirmed enrollees on the exchange – beating the revised 10 million figure, but falling significantly short of the expected 20 million. The ACA’s expansion of coverage to 20 million Americans is still far short of even its most conservative estimate of more than 30 million Americans gaining coverage.

Another measure of the ACA’s success is quantifying how many people have payed the individual mandate penalty. That is, qualified individuals who do not carry “minimum essential coverage” are obligated to pay an income-adjusted-penalty. The purpose of the penalty, as the government explained to the Supreme Court in NFIB v. Sebelius, was to prevent people from free-riding on the provision of the law that guarantees issuance of policies to everyone, regardless of pre-existing conditions.

Like the exchange enrollment numbers, the collected penalty revenue has lagged far behind original estimates.

There is an incongruence to these forecasts. The number of people who have gained coverage on the ACA exchange is far fewer than originally forecasted: 10 million instead of 20 million. As a result, more people who otherwise would have obtained coverage, should now be subject to the mandate’s penalty. The revenue should be far greater than originally predicted. But the exact opposite happened.

This shortfall can be explained by two executive actions taken by the Obama administration, which allowed people to avoid purchasing qualified insurance, without having to pay the individual mandate’s penalty.

The Administrative Fix

The first such executive action is known as the “administrative fix.” President Obama promised nearly three-dozen times that “if you like your plan, you can keep your plan.” Of course, this was a promise that could never be kept. Due to strict grandfathering regulations promulgated by the Obama administration, insurers cancelled policies that did not provide “essential coverage.” During the fall of 2013, as millions of Americans received cancellation notices, the President’s oft-stated promise crumbled. In response, in November 2013 he announced an executive action that came to be know as the “administrative fix.” To grossly oversimplify, the federal government would not enforce the individual mandate’s penalty against individuals who continued to carry these policies that would otherwise be void. The policy gave states, and ultimately the insurers, the choice of whether to continue selling these policies. I’ve argued elsewhere that this fix was unlawful, but most relevant for our purposes is how it impacted the vitality of the exchanges.

There were risks to allowing people to remain on old plans. Jim Donelon, Louisiana Insurance Commissioner, warned that the administration’s decision “threatens to undermine the new market, and may lead to higher premiums and market disruptions in 2014 and beyond.”Extending the grandfathering of noncompliant plans,” health care industry consultant Robert Laszewski observed, “tends to undermine the sustainability of Obamacare” because it reduces incentives for customers to purchase policies on the exchanges. And more likely than not, these grandfathered customers are younger and healthier, because they were able to obtain insurance even before the ACA’s guaranteed-issue requirement kicked in.

Moody’s Investor Service forecasted that the administrative exemption would result in “exposure to adverse selection” and was “likely to negatively affect earnings in 2014.” In June 2014, the Congressional Budget Office wrote that its downward forecast for penalty payments was due “in part to regulations issued since September 2012 by the Departments of Health and Human Services and the Treasury.” As a result, there is “an increase in [its] projection of the number of people who will be exempt from the penalty.” According to the IRS Commissioner John Koskinen, 12.4 million taxpayers claimed an exemption from the mandate for 2014. Koskinen explained that many tax-payers claimed an exemption because “health care coverage [was] considered unaffordable.” This is not one of the exemptions carved out by Congress in the ACA. Rather, this was a consequence of the president’s executive action, which waived the individual mandate’s penalty for taxpayers who told the government that a new policy was too expensive.

The fix was originally slated to provide temporary relief for one year. However, that would have resulted in millions of plans being cancelled in the fall of 2014, on the eve of the midterm elections. The president would not let that happen. HHS announced that noncompliant plans could be grandfathered through the end of 2016. Insurers were now able to renew noncompliant policies as late as October 1, 2016, so coverage could continue past the next presidential election into 2017. The New York Times observed this action “essentially stall[s] for two more years one of the central tenets of the much- debated law, which was supposed to eliminate what White House officials called substandard insurance and junk policies.”

By exempting millions of Americans from the individual mandate, the Obama administration disturbed the fragile balance Congress designed to prevent an adverse selection death spiral.

Special Enrollment Periods

As weak as these enrollment numbers are, the actual numbers of customers who continued to pay for their policies for nine consecutive months is even lower. In 2014, only 6.7 million out of 8 million enrollees paid their premiums through September. This 19% drop-off puts the 2014 figures well below the CBO forecasts. In 2015, only 9.3 million out of the 11.7 million paid their premiums through September. Over 25% of enrollees failed to consistently pay their bills. In 2016, only 11.1 million out of 12.7 million paid their premiums through March, with an expected 10 million to continue paying through September. Factoring in customers who actually continue to pay for coverage, the state and federal risk pools are barely at 50% of their anticipated size.

Savvy shoppers have learned to game the system: They sign up, receive treatment, and cancel coverage. The ACA was designed to restrict enrollment for  specific times to frustrate this opportunism. In 2009, CBO wrote that in addition to the individual mandate, the ACA’s “annual open enrollment period” would tend to mitigate … adverse selection.” In his brief to the Supreme Court, the Solicitor General explained that restricting enrollment to a fixed period “would reduce opportunities for healthy people to wait until illness struck before enrolling.”

However, in a desperate effort to boost raw enrollment numbers, the Obama administration consistently delayed signup deadlines through an ad hoc series of changes. According to The New York Times, HHS created more than thirty “special enrollment” windows, many of which were only mentioned in “informal ‘guidance documents.’” For example, customers were allowed to sign up late due to unspecified “exceptional circumstances,” “serious medical condition[s],” and – the most capacious standard – “other situations determined appropriate” by HHS.

The National Association of Insurance Commissioners complained that “consumers are not required to provide documentation to substantiate their eligibility for a special enrollment period.” Kaiser Permanent, a large health insurer, said that the potential for abuse “poses a significant threat to the affordability of coverage, and to the viability” of the exchanges. In 2016, the Government Accountability Office (GAO) concluded that HHS “has assumed a passive approach to identifying and preventing fraud.” The agency’s honor system policy “allowed an unknown number of applicants to retain coverage, including subsidies, they might otherwise have lost, thus producing higher costs for the federal government.”

Leading insurance companies submitted regulatory comments to HHS, warning that the extra signup windows risked destabilizing the insurance markets. Blue Cross Blue Shield explained that “individuals enrolled through special enrollment periods are utilizing up to 55 percent more services than their open enrollment counterparts.” Aetna added that “many individuals have no incentive to enroll in coverage during open enrollment, but can wait until they are sick or need services before enrolling and drop coverage immediately after receiving services … less than four months” later. United Healthcare, which will exit from most of the Obamacare exchanges in 2017, explained that more than 20% of its customers signed up during a special enrollment period, and they used 20% more health care than those who enrolled during the regular enrollment period.44 Anthem told the government that these modifications of the deadlines were “harming the stability of the exchange market and resulting in higher premiums.” The Obama administration’s sign-up-as- many-people-as-possible approach has eliminated one of the key constraints embedded in the ACA and reduced the force of the individual mandate.

During the exchange’s first three years, due to these sorts of ad hoc, regulatory changes, the ACA suffered from severe self-inflicted wounds. The Obama administration has recently announced that it was tightening up the special enrollment periods. Additionally, in 2017 the administrative fix expires. Plus certain measures designed to cushion the exchange’s birth–what is know as reinsurance and risk corridor also wind down in 2017. At that point, the full brunt of the ACA’s mandates will be faced.

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Josh Blackman is a constitutional law professor at the Houston College of Law, and the author of Unraveled: Obamacare, Religious Liberty, and Executive Power (Cambridge University Press, 2016).

 

Cross-posted at the Volokh Conspiracy.

In Burwell v. Hobby Lobby Stores and Zubik v. Burwell, the Supreme Court has now twice opined on the Affordable Care Act’s contraceptive mandate and its accommodation. However, this term is a misnomer. Congress did not vote on a contraceptive mandate, nor did it create a series of exemptions and accommodations for religious employers. Hobby Lobby and Zubik were both premised on executive actions taken by the Obama administration in light of legislative silence. Far from a historical curiosity, this congressional silence suggests that under the “major question” doctrine, the executive branch lacks the authority to pick and choose which religious groups are exempted from the mandate, and which are merely “accommodated.”

In 2009 and 2010, the issue of abortion-funding nearly derailed the Affordable Care Act. Only after President Obama signed an executive order, which Laurence Tribe called a “signing statement on steroids,” did pro-life Democrats led by Bart Stupak shift their support for the bill. However, as I discuss in Chapter 3 of Unraveled, during this time there was a far more significant debate about religious liberty that was never had.

In July 2009, Senator Barbara Mikulski (D-MD) introduced the Women’s Health Amendment to the ACA, which would mandate that all large employers provide insurance policies that cover certain “preventive care and screenings” for women. The bill was silent as to what those services were. Several pro-life Senators–both Republican and Democrat–asked Senator Mikulski to clarify that “preventive care” would never be interpreted to require payment for abortion services. Although she was content to fill the legislative history with assurances that abortions were not covered, she refused to specify how the provision should be interpreted.

Senator Brownback (R-KS) was not persuaded.  The future Governor of Kansas explained, “But, as we all know as legislators, it is one thing to say something on the Senate floor, and it is one thing to have a colloquy, but it is far different to have it written in the base law.” (Chevron skeptics take note). Mikulski once again refused any alterations, nor was there any conscience clause added to this provision.

As expected, the Obama administration interpreted “preventive care” to cover the full-range of FDA-approved forms of birth control, including the emergency contraceptive Plan B. Other than scattered references to “family planning” in the legislative record, the statute was completely silent about creating a new mandate for drugs some view as “abortifacients.”  Contrast this silence about the “preventive care” mandate with the individual mandate, for which Congress created a rigorous series of exemptions for conscientious objectors. (26 U.S.C. § 5000A(d)(2)(A)). Certain “religious sect[s] or divisions” as well as members of a “health care sharing ministry” did not have to pay the individual mandate’s penalty. The House recognized that forcing someone to buy insurance might conflict with their religious scruples.

The Women’s Health Amendment was the proverbial dog that didn’t bark. That no one objected to a mandate requiring all employers – with no exceptions for any religious groups – to provide contraceptives was itself evidence that this interpretation was not consistent with congressional intent. But, under the Chevron doctrine, it is a “reasonable” interpretation of a deliberately-ambiguous provision. (This episode strengthens the case for the new Chevron skepticism–Congress deliberately passed an ambiguous statute, and refused to clarify it, to avoid the political fallout).

The decision to interpret “preventive care” in this manner, however, created a significant dilemma for the Obama administration. The statute had no conscience exemption for religious employers to pay for and cover contraceptives that that they consider abortifacients. The Women’s Health Amendment did not even have a carve-out for houses of worship, let alone religious non-profits. All qualified employers were bound. To resolve this problem, the executive branch created a series of executive workarounds. Initially, a house of worship was only exempted if it “primarily serves persons who share its religious tenets.” A Catholic church that operates a soup kitchen for the entire community, regardless of faith, would not be exempted. After several more rounds of rulemaking, all houses of worship were exempted, but religious non-profits (such as the Zubik plaintiffs) were not. Instead, they received an “accommodation.” The nonprofit would not have to pay for the coverage, but (depending on how the plan was structured), the payments would be provided through the organization’s policy.

The accommodation was challenged as a violation of the Religious Freedom Restoration Act. However, there is an alternate ground of resolving this case. As I discuss in an amicus brief for Zubik, and my forthcoming article in the Harvard Law Review, the government lacked the interpretive authority to exempt some religious groups, and not others. The Departments concocted an exemption for houses of worship but not associated religious organizations based on the conclusory assertion that employees of the latter are “less likely” than the former “to share their employer’s . . .  faith.” (78 Fed. Reg. at 39,887). That HHS refused to exempt obviously religious non-profits illustrates how out-of-their-league the government was in evaluating religiosity. Indeed, Congress expressly exempted nonprofits like Zubik Petitioners from the anti-discrimination provisions of Title VII. (42 U.S.C. §2000e-1(a)). If they so choose, the nonprofits could only hire people of their own faith. Yet the Departments, with no basis, issued a blanket judgment that all religious nonprofits would have employees less likely to share their employers’ religious beliefs. There was not even an option for a case-by-case judgment.

Such haphazard and unauthorized guesswork by anonymous bureaucrats, in the face of longstanding congressional policy to the contrary, cannot justify an infringement of religious freedom. The fact that the rulemaking was premised not on health, labor, or financial criteria, but on the Departments’ own subjective evaluation about which employees more closely adhere to the religious views of their employers, “confirms that the authority claimed by” the Departments “is beyond [their] expertise and [is] incongruous with the [ACA’s] statutory purposes and design.” (Gonzales v. Oregon).

Earnest and profound questions regarding “the mystery of human life,” (Planned Parenthood v. Casey), are the quintessential “major questions” the Court has held Congress does not intend agencies to resolve absent clear delegation. The Departments’ attempt to force religious nonprofits to violate religious teaching regarding the start and nature of human life “lay[s] claim to an extravagant statutory power” affecting fundamental liberty interests—one the ACA simply does not grant. (UARG v. EPA). Because Congress “does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions,” (Whitman v. American Trucking), the Departments cannot alter the fundamental aspects of religious accommodation based on the ACA’s purposes. The narrow source of their statutory authority—which offers no religious exemptions for providing “preventive care”—could not hide a mouse, let alone the woolly mammoth that is religious liberty.

On Friday, I will revisit Zubik, and explain why the Court’s “compromise” decision resolved little. On remand, an application of the “major question” doctrine provides an alternate ground of resolution that avoids the sort of RFRA inquiry that the Court already punted on. Tomorrow, I will turn to “government by blog post.”

—

Josh Blackman is a constitutional law professor at the Houston College of Law, and the author of Unraveled: Obamacare, Religious Liberty, and Executive Power (Cambridge University Press, 2016).

Randy Barnett and I have a new piece in National Affairs, based on our contribution to the Chicago Law Review Online, titled Restoring the Lost Confirmation. We discuss how originalism can salvage the currently-meaningless confirmation hearing.  Here is the introduction:

There is a silver lining to the storm clouds brewing over Justice Antonin Scalia’s crepe-covered seat. During his speech nominating Chief Judge Merrick Garland to the Supreme Court this spring, President Obama faulted Democrats and Republicans alike for their prior positions on judges. “There’s been politics involved in nominations in the past” on both sides, Obama observed. He’s right. Over the past three decades, presidents and senators from both parties have ratcheted up the tension over Supreme Court nominees. And the lynchpin of that conflict is what has become an utterly meaningless ritual: the confirmation hearing. But not for the reasons you may think.

The conventional wisdom maintains that, in their current form, judicial confirmation hearings serve no meaningful purpose. This is because nominees, who are rationally self-interested in being confirmed, refuse to answer any questions that could jeopardize their prospects. Instead, the theory goes, when asked a controversial question, the nominee equivocates and obfuscates. Prospective judges nominated by presidents of both parties are trained through rigorous “murder boards” to provide answers that are designed to shed as little light as possible on how they will behave if confirmed.

The end result was accurately described by one legal scholar two decades ago: “When the Senate ceases to engage nominees in meaningful discussion of legal issues, the confirmation process takes on an air of vacuity and farce, and the Senate becomes incapable of either properly evaluating nominees or appropriately educating the public.” That scholar was Elena Kagan. Perhaps because of her astute awareness of this phenomenon, and to ensure her own confirmation, the former Harvard Law School dean and solicitor general did what all nominees do: deftly navigated between the straits of Scylla’s vacuity and Charybdis’s farce.

…

Before we proceed further, we should disclose that we are originalists, and we would like to see more originalist justices on the Court. We believe that the current vacuity of the confirmation process enables “living constitutionalists” to slip through the net and make it to the Court unscathed. Our objective is, therefore, not neutral between constitutional approaches. But we also believe that a focus on clauses rather than cases during confirmation hearings would improve the quality and character of hearings for everyone by moving away from vapid questions and farcical answers. Living constitutionalists would be perfectly free to explain and defend their approach to the senators.

Critically, through this refined focus, the senators — and ultimately the people as sovereigns — can engage in a public dialectic with the nominees to probe their deepest knowledge of the portions of the Constitution that do not change with time. Our proposed approach seeks to restore the lost confirmation, where the focus on the text and history of our “republican” Constitution — the truly immutable characteristics of our fundamental law — are paramount and timeless. And if we are right that the original meaning of the Constitution does produce determinate answers to constitutional controversies, then our approach will offer useful insights into how a nominee will vote once no longer constrained by precedents.

Our approach may be easier than it seems, because only 1 or 2 Senators–perhaps those who are former SCOTUS clerks–would have to pose the sorts of originalist inquiries need to change the tone of the proceedings.

But we don’t need a cadre of originalist senators. The beauty of this approach is that no rules need be changed; no bipartisan agreement need be reached; and the Republicans on the Senate Judiciary Committee need not even all be of the same mind. For this approach to restore the lost confirmation hearing, we need only a senator or two to focus their limited time on originalism. And we have full confidence that the Judiciary Committee counsels on both sides are quite capable of generating useful questions for the nominees.

Imagine if a handful of senators — perhaps Ted Cruz of Texas or Mike Lee of Utah, both former Supreme Court clerks — grilled Chief Judge Garland on the questions we asked above. Garland — whose two-decade record on the bench shows absolutely no affinity for originalism — may prove utterly incapable of answering their questions, beyond perfunctory platitudes. Whenever Garland reverts to discussing case law, the senator might interrupt and say, “I am not interested in precedents. Once confirmed you can change all that. I want you to discuss matters you cannot change, like the Federalist and Anti-Federalist Papers, Blackstone’s Commentaries, the records of the Constitutional Convention, records of the ratification of the 14th Amendment, and other contemporaneous sources.” Any effort to shift back to citing cases should be swiftly halted. With such a rough going, the tenor of the debate would immediately change. These questions are especially critical given that the next nominee will fill the seat of Antonin Scalia, who ought to be canonized as the patron saint of originalism.

Unlike the “gotcha” questions that have marked recent hearings, these originalist questions are entirely fair game. Even the most qualified candidate could be embarrassed. His lack of preparation might reveal to the American people something meaningful about how he would go about making decisions once no longer controlled by stare decisis. The inquiring senators would make the seminal point that the Constitution is not just what five justices say it is — the Supreme Court does not have a monopoly on interpreting the document. If a nominee replies that these historical sources are not relevant, or not worthy of study (as federal court of appeals Judge Richard Posner recently asserted), then that is an entirely justifiable ground for voting against his confirmation.

On Thursday, September 22, the Houston Lawyers Chapter of the Federalist Society will host me for an #Unraveled book discussion. Details of the event are here. Online registration has concluded, but you can pay at the door. If you are in the area, I hope you can make it. I will be autographing books, or if you don’t have one yet (buy it!) book plates.