A Strike at the Heart of Obamacare

by Quin Hillyer
A case against IPAB is heard by the Ninth Circuit — and eventually by the Supreme Court?

Conservatives distressed by a major federal court ruling Tuesday in favor of Obamacare should take heart: What might be an even more potent challenge to the law is scheduled for oral argument on January 28.

Tuesday’s decision in Halbig v. Sebelius, by D.C. federal-district-court judge Paul Friedman, shoots down (for now) one of several pending challenges to an Internal Revenue Service rule providing insurance-premium subsidies even to residents of states that do not establish insurance “exchanges” under Obamacare. Conservatives have put lots of stock in these challenges, because without the subsidies the entire Patient Protection and Affordable Care Act (PPACA) becomes far less attractive and therefore politically even less sustainable than it already is.

While the challenges to the subsidies look like good cases (and while this adverse decision already is being appealed), they don’t come close to addressing the law’s most obnoxious violations of Madisonian principle and essential constitutional structure: that monstrosity called the Independent Payment Advisory Board (IPAB), a 15-member body invested with virtually unreviewable, plenipotentiary powers. Of all Obamacare cases that have gone to court, only one has included IPAB among its targets: Coons v. Lew (formerly Coons v. Geithner), spearheaded by the Goldwater Institute and slated to be argued before the Ninth Circuit Court of Appeals a week from tomorrow. One of the plaintiffs, Eric Novack, a medical doctor, faces potential cuts in his reimbursement rates via IPAB decrees; he and Goldwater challenge IPAB for violating the Constitution’s separation of powers.

By the terms of the PPACA, IPAB can, within limits, exercise explicitly legislative powers to set policy for any matter “related to the Medicare program,” with other provisions making clear that IPAB can treat within that purview any “system-wide health-care costs, patient access to care, utilization, and quality of care . . . [including from] private payers.” It can do so without resorting to ordinary notice-and-comment rule-making and with very little opportunity for Congress to overturn its decisions or even amend them beyond a severely circumscribed scope. Worse, IPAB’s actions are exempt from judicial review, leaving aggrieved parties with neither legislative, administrative, nor judicial recourse in reining in unwarranted power grabs.

And, astonishingly, the law purports to prohibit Congress from repealing IPAB at any time except within a three-month window in 2017, and even then only with a three-fifths-majority vote.

This is lunacy. Since when has an ordinary statute ever been both non-reviewable and non-repealable?

In United States v. Winstar Corp. (1996), the Supreme Court explicitly recognized and approved “the centuries-old concept that one legislature may not bind the legislative authority of its successors” — a principle recognized in American constitutional jurisprudence by Chief Justice John Marshall in Fletcher v. Peck (1810), who wrote that it “can never be controverted.” For the same principle, Goldwater’s brief cited other authorities ranging from Thomas Jefferson to modern center-left constitutional scholar Akhil Reed Amar of Yale Law School.

Goldwater’s briefs are correct to assert that “IPAB represents the most comprehensive consolidation of executive, judicial, and legislative power in a single administrative entity in American constitutional history.” As such, as Goldwater notes, IPAB violates multiple principles enunciated by James Madison in the Federalist Papers, as well as John Locke’s iron rule that “the Legislative can have no power to transfer their Authority of making laws, and place it in other hands.” Of course, as noted in the briefs, the Supreme Court has recognized these bedrock principles numerous times during the past two centuries.

A federal district court ruled against Goldwater’s plaintiffs — on the IPAB challenge and other grounds as well — but round two begins with the oral argument before the Ninth Circuit next week. Astute observers note that the lower-court judge concentrated more on the other legal issues involved in Coons v. Lew than it did on IPAB.

“The district court gave awfully short shrift to the argument that IPAB is unconstitutional,” Ilya Shapiro, a constitutional-law expert at the Cato Institute, tells me. “But the challenge to IPAB is very strong. It has real legs in terms of the Constitution’s structural protections of the separation of powers and, ultimately, of liberty. We cannot have a government entity that both institutes and enforces its own rules without review by anyone else.”

As of this writing, the Ninth Circuit has not yet named its three-judge panel for this case. The circuit as a whole, of course, is notoriously left-wing. Eventually, though, there is a good chance Coons v. Lew will be decided by the Supreme Court — and the Supremes in recent years seem to be taking more seriously the obligations to safeguard the Constitution’s structural protections for liberty.

Striking down IPAB, the most powerful cost-control mechanism in all of Obamacare, could be the last straw in making the whole law unworkable, leading to its demise. And that is one death that would put all the rest of us out of our misery.

— Quin Hillyer is a contributing editor of National Review.