Editor’s note: This piece originally appeared at Chris Jacobs on Health Care. It is reprinted here with permission.
Late Thursday evening, the administration announced that it was immediately ending cost-sharing-reduction payments to health insurers offering plans in Obamacare exchanges. And regardless of what the press or liberals might claim, the decision isn’t, or shouldn’t be, about “sabotage.” It isn’t, or shouldn’t be, about Obamacare “imploding.” It’s about one thing — and one thing only: the rule of law.
The text of Obamacare nowhere includes an appropriation for the cost-sharing-reduction payments, which reimburse carriers for discounting deductibles and co-payments for low-income exchange enrollees. The Obama administration knew that — but went ahead and made the payments anyway. One slight problem: The Constitution clearly gives the “power of the purse” to Congress: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”
Without an appropriation, the Trump administration has no choice but to end the payments to insurers — just as the Trump administration would have no choice but to make the payments to insurers if an appropriation existed. One can easily make the argument — as this observer has — that the administration should have ended the payments months ago.
But in time the Trump administration did conclude — correctly — that President Obama had no more authority to make Obamacare payments without an appropriation than President Trump has to make payments for a border wall without an appropriation. By complying with the law and the Constitution to end the payments, President Trump actually diminished his executive power and ability to act unilaterally — restoring a rightful balance of power between the branches. Democrats fearful of the implications of three more years of a Donald Trump in the White House have reason to thank him for so doing.
But they won’t. Instead the cries of “sabotage” will continue — disregarding the fact that President Obama, by valuing Obamacare more than he valued the Constitution itself, sabotaged the rule of law. When Tom Price resigned as secretary of health and human services last month, Senate Finance Committee ranking member Ron Wyden (D., Ore.) said his replacement “needs to be focused on implementing the law as written.” By cutting off the cost-sharing payments, that’s exactly what the Trump administration has done — implemented the law as it was written, rather than as Democrats wished they had written it.
As for insurers, they can’t say they weren’t warned. Here’s what yours truly wrote about cost-sharing reduction payments nearly a year and a half ago:
The next President could easily wade into the [cost-sharing reduction payments]. Say a Republican is elected and he opts to stop the Treasury making payments related to the subsidies absent an express appropriation from Congress. Such an action could take effect almost immediately. . . . Come January 2017, the policy landscape for insurers could look far different [from how it looked under the Obama administration].
That’s exactly what happened. Insurers gambled that they — and Obamacare — were “too big to fail,” despite a court ruling last May striking down the subsidy payments as unconstitutional. Because the court stayed that ruling, insurers assumed the next president would blithely continue the unconstitutional payments during its appeal. They assumed wrong.
Congress, having sparked the lawsuit when the House of Representatives sued to protect its constitutional prerogatives, could of course use its “power of the purse” to reinstate the cost-sharing-reduction subsidies — this time through an explicit appropriation, rather than executive fiat. But before even considering such an action, it should first thoroughly investigate, and develop policies to eradicate, the “too big to fail” mentality that led insurers — and state insurance commissioners — to assume that unconstitutional acts would continue in perpetuity. Even better, Congress could instead develop ways to dismantle the structure of regulations and mandates that insurers believe requires them to receive $135 billion in subsidy payments in the first place.
For the time being, individuals likely will not see any direct effects from the payments ceasing. Carriers cannot exit exchanges mid-year, and contracts for the 2018 plan year are already signed. (A provision in carriers’ 2017 and 2018 contracts lets them exit exchanges if enrollees do not receive cost-sharing reductions — not if the insurers themselves do not receive reimbursement for those cost-sharing reductions. This clause, awkwardly drafted by insurers’ counsel, may provide them with little legal recourse — and further highlights their questionable assumptions and behavior surrounding the subsidies.) So maybe — just maybe — Washington can spend some time focusing on the real issue behind the administration’s action: Upholding the Constitution.