Politics & Policy

The House Stands Up to Unconstitutional Obamacare Payments

Judge to Obama Lawyer: ‘You can’t just shake your head and say no.’

Time and again, the Obama administration has modified, delayed, and suspended the law through unprecedented executive actions. The government’s most frequent defense is denial: Because no one is injured by their actions, no one has “standing” to challenge the actions in federal court. However, once forced to defend its policies, the government finds that its specious arguments quickly crumble.

In a historic decision yesterday, a federal court held that unappropriated funds paid under Obamacare were unconstitutional and that the House of Representatives could challenge them in court. This decision should resonate widely, as other courts continue to shine a light on illegal presidential power.

The Affordable Care Act employed two strategies to make health insurance more affordable. Section 1401 of the law provides for subsidies to consumers to reduce the cost of policies. (Last June, the Supreme Court upheld the payment of these subsidies on HealthCare.gov.) Section 1402 reduces certain “cost sharing” fees that insurance companies can charge, such as deductibles and co-pays. But Congress approached these sections differently. The legislative branch funded Section 1401 by adding it to what is known as a permanent appropriation, to ensure that the subsidies would always flow. Congress, however, did not fund an appropriation for Section 1402 — i.e., each year it would require a new line item in the budget.

Recognizing that Congress did not provide funding for Section 1402, the Obama administration requested $1.4 billion for fiscal year 2014. Congress denied that request. Instead of dealing with reality, the government instead pretended that the ACA actually funded Section 1402 all along — it didn’t need to even ask for money in the first place! Therefore, the Department of Health and Human Services (HHS) continued to pay billions of dollars to insurance companies that suffered losses under Obamacare.

Article I of the Constitution provides that ‘no Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.’

In 2014, the House of Representatives filed a lawsuit alleging that the executive branch spent money without a congressional appropriation. The government’s first line of defense was to argue that the House lacked standing because it was not injured. But the administration steadfastly refused to address how HHS was spending money that Congress chose not to appropriate. During a hearing last year, Judge Rosemary Collyer expressed her frustration with the government’s unwillingness to justify its actions. She chided the Justice Department lawyer, “You can’t just shake your head and say no, no, I don’t have to answer that question.” When he bobbed and weaved, Collyer charged: “This is the problem I have with your brief: It’s not direct. It’s just not direct. You have to address the argument that [the House] makes and you haven’t.”

In September 2015, the court found that the House was injured and had standing to sue. Judge Collyer wrote that the “constitutional trespass alleged in this case would inflict a concrete, particular harm upon the House for which it has standing to seek redress in this Court.”

RELATED: An Anti-Obamacare Victory for the House — and the Constitution

From there, it was downhill for the government. No longer able to hide behind the “standing” shield, the Justice Department had to confront the legality of the payments. Article I of the Constitution provides that “no Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” No appropriation, no money. In Federalist No. 58, James Madison wrote that “this power over the purse may, in fact, be regarded as the most complete and effectual weapon” of Congress to check the executive. These appropriations, Judge Collyer wrote, are an “integral part of our constitutional checks and balances, insofar as they tie the Executive Branch to the Legislative Branch via purse strings.”

#share#The court systematically rejected each of the executive branch’s arguments. First, Judge Collyer scoffed at the government’s ludicrous argument that the appropriation for Section 1401 also provides an appropriation for Section 1402. “It is a most curious and convoluted argument,” she wrote, “whose mother was undoubtedly necessity.” In other words, the creative lawyers at the Justice Department made a textualist argument because they had to say something in court. But in fact, Congress permanently appropriated funding for Section 1401, to cover the subsidies for insurance premiums, but did not appropriate any funds to reimburse insurance companies under Section 1402. It really is that simple.

RELATED: The Increasing Instability of Obamacare

Second, the government argued that the appropriation from Section 1401 can be understood to also cover Section 1402, because the two policies are “economically and programmatically integrated.” The court recognized that “an appropriation must be expressly stated; it cannot be inferred or implied.” Congress does not “squeeze the elephant of Section 1402 reimbursements into the mousehole of Section 1401.” Billions of dollars in spending are not left to implication. Even if we assume that the two policies are connected, this argument does not work.

Third, HHS warned that blocking payments to insurance companies would “yield absurd economic, fiscal, and healthcare-policy results.” Judge Collyer dispatched this argument, finding that the “results predicted by the [government] flow not from the ACA, but from Congress’ subsequent refusal to appropriate money.” If Congress does not want the government to pay insurance companies for losses suffered because of Obamacare, the court concluded, “that is Congress’s prerogative; the Court cannot override it by rewriting” the ACA. In short, paying the Section 1402 subsidies based on the 1401 appropriation “violates the Constitution. Congress is the only source for such an appropriation, and no public money can be spent without one.”

RELATED: Obamacare’s Taxpayer-Subsidized Failure

Conservatives have long advocated for a rigorous standing doctrine as a means to prevent “activist” courts from interfering with the democratic process. Indeed, Justice Antonin Scalia viewed standing as “a crucial and inseparable element of the separation of powers.” He wrote that making it harder for plaintiffs to bring constitutional challenges in federal court would reduce the “overjudicialization of the processes of self-governance.” The late justice’s approach is sound in theory, but risky in fact. In recent years, rather than protecting the separation of powers, the standing doctrine has served to insulate ambitious presidents as they run amok across what James Madison referred to as “parchment barriers.”

Judge Collyer’s decision to grant the House of Representatives standing has exposed an illegal expenditure of billions of dollars without even the pretense of an appropriation. Relatedly, the Fifth Circuit’s decision to grant the state of Texas standing to challenge President Obama’s immigration actions has shined a light on an unprecedented act of executive lawmaking. Cramped standing doctrines would allow these abuses of presidential power to continue without any scrutiny. Government lawyers can simply walk into court and shake their heads no. When the president is willing to spend money without Congress’s permission, or to rewrite laws when Congress refuses to, the traditional political process has collapsed. The courts must force the executive branch to explain its actions and abide within its broad — but constrained — sphere of power.

#related#Later in his tenure, Justice Scalia may have started to reconsider his once-strict views on standing doctrine as it relates to the separation of powers. In National Labor Relations Board v. Noel Canning, the Court unanimously invalidated President Obama’s illegal recess appointments. Justice Scalia concurred in judgment, but his opinion read more like a dissent. He lamented that the Court squandered a rare opportunity where parties had standing to raise a separation-of-powers challenge. “It is not every day that we encounter a proper case or controversy requiring interpretation of the Constitution’s structural provisions,” Scalia wrote. He urged the Court to “take every opportunity to affirm the primacy of the Constitution’s enduring principles over the politics of the moment.” Judges should think twice about looking askance at abuses of the rule of law before sticking their head in the sands of standing doctrine.


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