Delaying Obamacare to Death

by John Daniel Davidson
The president cannot change a law or decline to enforce it for policy reasons.

Given the number and frequency of the Obama administration’s delays of Obamacare — more than a dozen, by some counts — it’s clear that the White House believes the law is as malleable as it needs it to be and that almost any alteration of it falls within the purview of executive authority.

But as Michael Tanner, Yuval Levin, Avik Roy, and others have pointed out, the statutory text of the Affordable Care Act doesn’t appear to allow for these rolling, ad hoc delays. Not only does the law dictate that the employer mandate take effect January 1, 2014, but it states bluntly that if employers do not begin providing health coverage by then, the ACA will impose “on the employer an assessable payment.”

So far, the administration has not given much in the way of a legal justification for shrugging off the requirements of the statute. But because the executive branch obviously thinks it can forgo legal justification and simply change Obamacare by administrative fiat, it’s important that we understand why. (Jonathan Cohn at The New Republic, among others, thinks it’s impossible to say what the administration’s rationale is — and that it doesn’t really matter anyway — but that’s not quite the case.)

To get there, one has to go back to a letter sent to Representative Fred Upton (R., Mich.) by Treasury Department official Mark Mazur last summer, after the first employer-mandate delay. Mazur cited “the Treasury Department’s longstanding authority to grant transition relief when implementing new legislation like the ACA.” As examples of transition relief, he cites the Small Business and Work Opportunity Act of 2007 and the Airport and Airway Extension Act, part IV, signed in August 2011.

The Small Business and Work Opportunity Act expanded tax credits available to small businesses that employ people generally in need of a job — welfare recipients, veterans, ex-felons. The law took effect May 25, 2007, but in July of that year the Treasury Department issued a detailed bulletin describing how one section of the statute, a penalty for income-tax-return preparers, needed to be delayed so the IRS could “alter existing procedures in order to process disclosures with certain forms and in electronic formats.” In other words, the agency had to modify some tax forms to accommodate the requirements of the statute. Thus transitional relief was granted for that section of the statute. However, the bulletin carefully delineated the scope of transitional relief to be granted and set a hard date for its expiration:

This transitional relief will apply to all returns, amended returns, and refund claims due on or before December 31, 2007 (determined with regard to any extension of time for filing); to 2007 estimated tax returns due on or before January 15, 2008; and to 2007 employment and excise tax returns due on or before January 31, 2008.

Note how brief and targeted the transitional relief is, and how its purpose is relatively clear. “The amendments made by the Act raise questions regarding activities representing preparation of a tax return, who is a return preparer within the meaning of section 7701(a)(36) (as amended), and how the statute applies to signing and non-signing preparers,” the brief explains. Although written in dense IRS bureaucratese, the point is that there was a lack of clarity in the statute that needed to be addressed.

The other example cited by Mazur, the 2011 Airport and Airway Extension Act, was a retroactive extension of some aviation-related excise taxes that expired in July 2011. The statute was signed into law on August 5, 2011. A month later, Treasury issued a bulletin to explain why it was not collecting excise taxes on purchases of airline tickets made after July 22, 2011, and before August 8, 2011, citing section 7805(a) of the IRS Code, which gives the agency authority to “prescribe all needful rules and regulations for the enforcement of this title.”

In this case, the problem was that after July of that year, airline-ticket taxes were not collected or paid by airlines and passengers because said taxes had expired. Retroactively collecting taxes on purchases that had already occurred, Treasury said, would pose an “administrative burden” on both parties. But note that the exemption ends on August 8, 2011 — presumably because the taxes were reauthorized by a law signed three days before that, and the relevant parties had begun paying and collecting the taxes on their own again.

The point of all this is not to bore you to death but to contrast the arbitrary and seemingly open-ended delays of Obamacare with legitimate examples of delays to certain sections of statutes. In the above cases cited by the administration, delays were needed to ensure a smooth transition to changes in policy or clarify exactly who would be subject to new rules.

Not so with the delays of Obamacare. In its 227-page bulletin on the employer-mandate delay, Treasury referred to its bulletin of last July as a justification for the ongoing delays announced this week. In the earlier bulletin, the reason cited is a desire to “provide additional time for dialogue with stakeholders” and to “simplify the reporting requirements,” as well as to give employers extra “time to develop their systems for assembling and reporting the needed data.”

Have employers not had enough time to figure out how to report this stuff? In the four years since Obamacare’s passage, has the IRS not had enough time to figure out how to impose taxes on employers that don’t comply with the law? With this week’s announcement, the employer mandate for mid-sized firms has now been delayed two years from when it was originally supposed to take effect — and Treasury even hinted last week that it might delay the mandate yet again if things don’t go smoothly come 2016. Meanwhile, the mandate will go ahead, in a weakened form, for large firms beginning in 2015. Either there is a problem with the reporting requirements, or there isn’t. Why the arbitrary distinction?

The more likely explanation is that any attempt to enforce the mandate as originally written would have economic consequences in the form of both large and midsize employers’ cutting back hours, downsizing, and hiring fewer workers. In that case, the delay has nothing to do with the technical problems of implementing the mandate tax and everything to do with mitigating the harmful political effects of a deeply flawed and unpopular policy.

Trouble is, a U.S. president cannot decline to enforce laws for policy reasons, nor can he change a law. All he can do is sign, veto, or propose new legislation. In 1998, the U.S. Supreme Court in Clinton v. City of New York affirmed, “There is no provision in the Constitution that authorizes the president to enact, to amend, or to repeal statutes.” And this is not a simple matter of choosing not to collect penalties: As constitutional-law professor and Volokh Conspiracy co-founder Eugene Kontorovich noted, “The employers are not being relieved just from taxes, but from direct primary legal obligations to provide insurance.”

That is, major parts of Obamacare are effectively being repealed by the Obama administration in what amounts to rule by administrative decree — a far cry from John Adams’s notion that “we are a nation of laws, not of men.”

Arbitrary executive power of this sort might be expedient for the administration in the short term, but it dangerously undermines the rule of law. As my colleague Mario Loyola put it recently, “The power to say what the law is not is the same as the power to say what the law is, and under our Constitution the president doesn’t have that power.”

If the White House can repeal and rewrite major provisions of a sweeping new law like the ACA with nothing more than rickety excuses about “ensuring a smooth transition,” what will stop a future Republican president from doing the same for his own policy agenda?

That’s not something to look forward to, but something to fear. Our loyalty is and must always be to the Constitution. Delaying Obamacare to death, though it might be a short-term victory, would not be worth it if it meant sacrificing the rule of law. As the administration’s delays and justifications mount, we are ensuring a smooth transition not to a working health-care system, but to lawlessness.

— John Daniel Davidson is a senior health-care-policy analyst at the Texas Public Policy Foundation and a 2013 Lincoln Fellow of the Claremont Institute.