Just Do It: Trump Preparing to Axe Congress' Illegal Obamacare Exemption?

Posted: Aug 01, 2017 2:30 PM

With the future of Obamacare replacement legislation very much in limbo -- with new signs of movement still cropping up -- conservative activists' attention has turned to a pair of potential executive actions President Trump could take to alter the trajectory of the failing law.  Each action would be entirely defensible from a legal standpoint, as both entail ending Obama-era payments that Republicans have consistently and convincingly lambasted as illegal.  That being said, one is much more politically palatable than the other.  The president alluded to this pair of issues in a weekend tweet:

Law professor Josh Blackman outlines the controversial payments, beginning with Obama's back-door sweetheart deal for members of Congress and their staffs:

First, the White House should put an end to Congress’s special treatment under the Affordable Care Act. In 2009, Senator Chuck Grassley (R., Iowa) suggested an amendment to the health-care bill that would have prevented members of Congress and their staffs from receiving the same insurance other federal employees were eligible for; instead, they would purchase coverage on the exchange. As drafted, the provision eliminated the generous subsidies — in the form of employer contributions — that members and their staff previously received. Under the law, workers on Capitol Hill would now be put in the same position as other Americans who had to pay the full cost of their insurance. As you can imagine, this provision proved to be very unpopular, but to this day Congress has not changed the law. Yet where Congress would not act, President Obama did so unilaterally. The Office of Personnel Management (OPM) announced that if members of Congress and their staff purchased insurance on the District of Columbia’s small-business exchange, they would receive the same employer subsidies that had been available to them before the Affordable Care Act. Mr. Trump is exactly right that this is a “BAILOUT.” But more important, the payments are a blatantly illegal effort to bypass Grassley’s unpopular amendment.

In 2014, a federal judge concluded that with the so-called OPM fix, the “executive branch has rewritten a key provision of the ACA so as to render it essentially meaningless in order to save members of Congress and their staffs.” Allowing the administration to rewrite the law, he wrote, “would be a violation of Article I of the Constitution, which reposes the lawmaking power in the legislative branch.” However, because the plaintiffs in the lawsuit (Senator Ron Johnson and one of his staffers) were not personally injured by OPM’s policy — indeed they benefited — the case was dismissed for lack of standing. While the Obama administration was content to make these illegal payments, the Trump administration should halt them.

When he writes "unpopular," he means unpopular on Capitol Hill. The reason Grassley's amendment was adopted (and later unilaterally subverted by Obama) is that members were scared to give themselves a special deal to avoid abiding by the very law they were imposing on millions of Americans. When this issue arose again during the American Health Care Act debate, the House voted unanimously to force themselves to live under any healthcare law they might pass.  But as things stand today, Obama's bailout permits Congress' privileged class to qualify for employer-style subsidies -- which should be unavailable to many of them under the law, as written.  Phil Kerpen is highlighting publicly-released documents that appear to prove Obama's bailout of Congress is based on an unlawful fraud:

Seriously? Listing the Senate and House as "small businesses" with "50 of fewer full-time employees"?  By ending this farce and forcing Congress to live under the letter of the law Democrats passed, members and staffers making a certain amount of money would be on the hook for Obamacare's expensive premiums.  They'd hate that, because as millions of Americans have learned, the "Affordable" Care Act isn't affordable.  By canceling Obama's bogus scheme, Congress would immediately and acutely feel the resulting pain -- likely spurring them to either (a) overhaul the collapsing law in some way, or (b) enact a special carve-out for themselves, which would not play well with voters.  Meanwhile, these are the other payments Trump could nix:

While the ACA funds the subsidies under Section 1401 with a permanent appropriation, to date, Congress has not provided an annual appropriation for the cost-sharing subsidies under Section 1402. Once again, where Congress would not act, President Obama did so unilaterally. The executive branch pretended that the ACA had actually funded Section 1402 all along, and it paid billions of dollars to insurers...Last year, a federal court ruled that Congress did not “squeeze the elephant of Section 1402 reimbursements into the mousehole of Section 1401.” Mr. Obama’s policy “violates the Constitution,” the court concluded. ”Congress is the only source for such an appropriation, and no public money can be spent without one”...If Congress wants the government to subsidize unprofitable insurance, it should pass a bill.

The legal reasoning is airtight. These are unlawful subsidies being paid out without Congress' permission. On this point, House Republicans have prevailed in court -- so why wouldn't Trump run his pen through this flagrant illegality and be done with it? Political reality. If the illegal "cost sharing" dollars disappear, the already-unstable Obamacare exchanges would completely implode. The few remaining insurers, already bleeding money in most markets, would suffer even deeper losses. They'd pull up stakes and cease offering plans under the law, or massively hike rates to compensate. It would be Obamacare's existing spiral, but at warp speed. People purchasing their coverage through the exchanges would be totally screwed, and Democrats would cry "sabotage." This argument has been weak thus far, but would have more teeth if Trump ends the payments.  The media will pound away at Republicans for this change, even though the Democrats designed a law that would fall apart without regularly-appropriated bailouts.  Keep in mind that Obamacare is struggling badly even with the unlawful slush fund money flowing; without it, the chaos and harm gets worse.  Given the intense pressure that would ramp up, some Republicans are already suggesting that they'll have to appropriate the funds:

The best constitutional outcome would be for Trump to cease paying out money that Congress hasn't approved, and for Congress to fulfill its role.  But how excited would Republicans on the Hill be about voting to codify Obamacare bailout-style funds directly after failing to repeal and replace the law they've promised to upend for years?  How would the GOP base react to that?  One could make the case that the urgency of the situation could allow Republicans to force Democrats to offer some concessions on reforms.  But until Republicans make clear that they can govern, Democrats have the leverage right now -- and they'd exploit it by angrily arguing that the GOP was holding critical subsidies "hostage" to other agenda items.  The press would go along, naturally, and the criticism would grow.  Who wants to bet the GOP would walk away from that scenario empty-handed, in terms of tangible progress?  That's why this is a much tougher political spot than the maneuver to end Congress' unfair deal, which has obvious populist appeal.

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