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Health-Care Waivers and the Courts
Contract rights point to a remedy for an unconstitutional action.


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Are the constitutional defenses of health-care waivers persuasive? Do they even reflect an understanding of the realities of the health-care statute? And if the waivers are unconstitutional, could there be remedies in the courts?

The health-care statute requires group health plans and health insurers to raise their annual limits on coverage. In particular, it requires them to offer coverage that meets “restricted annual limits,” as determined by the secretary of health and human services. These limits, however, are so severe that, to make the health-care act practicable, HHS has given out over 1,000 waivers.

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As argued in these pages, these waivers are an unconstitutional exercise of the dispensing power, which creates a power above law and thereby threatens equal rights under law. The point here, however, is more basic. The constitutional defense of the health-care waivers has thus far been a defense of waivers in general, without attention to the realities of the health-care statute. As a result, the defense of the waivers not only is wrong on the Constitution but also is irrelevant to the statutory realities.

Consider, first, the argument that the waivers are constitutional because Congress can delegate a waiver power. It is sobering enough that the defenders of the health-care waivers would suggest that Congress can delegate a power it does not have. But even if Congress could do this, the delegation point would be relevant only if Congress had actually delegated a waiver power.

In fact, the health-care statute says nothing about granting HHS a power to waive the restricted annual limits. As reported by David J. Shestokas, congressman Cliff Stearns of Florida — chairman of the House Energy and Commerce subcommittee on oversight and investigations — complained, “The word ‘waiver’ is not in there. We can’t find it anywhere.”

Of course, Congress could have granted the power to waive the restrictions in a more subtle manner — for example, as part of the substantive authority granted to the secretary of HHS to determine the restricted annual limits. But statutory provisions must be understood in their statutory context, and this context shows that when Congress sought to give the secretary a waiver power, it had no difficulty doing so expressly. For example, in its provision on state innovation, the statute specifies that “The Secretary may grant a request for a waiver . . . ” In contrast, in its provision on restricted annual limits, the statute does not say anything of the sort. Evidently, Congress did not delegate a waiver power for the restricted annual limits.

This conclusion has support from an unlikely quarter. The HHS Office of Consumer Information and Insurance Oversight has been announcing and explaining the waiver program for the restricted annual limits, and it carefully distinguishes between the statute and the regulations. According to the office, whereas the “Act . . . requires the Secretary to impose restrictions on the imposition of annual limits. . . . The regulations . . . provided that these restricted annual limits may be waived by the Secretary.” Thus, even HHS appears to recognize that there is no statutory delegation.

The delegation argument thus becomes rather comic. The statute authorized the secretary of HHS to determine the restricted annual limits. On this foundation, the secretary then made regulations determining the limits and authorizing the secretary to waive those limits. The secretary thus is the source of the secretary’s power to issue the waivers. If this is delegation, it is self-delegation.

Unfortunately, it gets worse, for a second constitutional defense of the waivers has been to suggest that the executive may waive regulations, even if not statutes. This argument acknowledges the possibility that a waiver of a statute may be unconstitutional, but suggests that delegated waivers of regulations are permissible. This argument, however, collides with the reality that the health-care waivers apparently dispense with both the regulations and the statute. As a result, the narrower point about waiving regulations is irrelevant.



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