Politics & Policy

Trump Was Right to End Unconstitutional Obamacare Subsidies

(Jim Young/Reuters)
They were never lawful because Congress never appropriated the money.

It’s a sad sign of our times that the constitutionality of any given government action is now seen as a wholly secondary consideration, subordinate to politics and arguments about politics. And so it is with Donald Trump’s necessary decision to halt federal payments of cost-sharing subsidies to insurance companies.

For example, here’s how the Washington Post led off its coverage of Trump’s decision: “President Trump is throwing a bomb into the insurance marketplaces created under the Affordable Care Act, choosing to end critical payments to health insurers that help millions of lower-income Americans afford coverage.”

The New York Times headlined its article with the declaration “Trump to scrap critical health care subsidies, hitting Obamacare again.” But that’s not exactly right. In reality, the Constitution scraps Obama’s subsidies. They were never lawful because Congress never appropriated the money.

Here’s the legal background. Section 1402 of Obamacare requires insurance companies to reduce deductibles, copayments, and other similar payments for lower-income consumers and then says that the federal government will reimburse the insurers for their losses. Specifically, insurers will notify the federal government of the amount of their price reductions, and the government will “make periodic and timely payments to the insurer equal to the value of the reductions.”

Clear enough? There was just one problem. Unlike other provisions of Obamacare covering other forms of subsidies (for example, Section 1401, which funded subsidies that helped cover insurance premiums), the law didn’t specifically appropriate any money to fund these payments.

This isn’t a small thing. In fact, it implicates the core constitutional structure of our government. Article I, Section 9, of the Constitution unambiguously declares that “no Money shall be drawn from the Treasury, but in Consequence of Appropriations made by law.” The most relevant federal appropriations statute states quite clearly that “a law may be construed to make an appropriation out of the Treasury . . . only if the law specifically states that an appropriation is made.”

In fact, there is unmistakeable evidence that President Obama knew that his administration needed a specific appropriation to fund Section 1402 subsidies — he asked Congress for the money. Congress said no. It didn’t appropriate a single dime. So Obama did what he did best: He “penned and phoned” the subsidies into existence. He directly violated the Constitution by spending the money anyway.

The House of Representatives sued, and on May 12, 2016, federal district court judge Rosemary Collyer ruled in the House’s favor and held that the Obama administration’s payments were unlawful. Her opinion reads like a 38-page civics lesson, but for all its length the court’s core holding is simple: “The Affordable Care Act unambiguously appropriates money for Section 1401 premium tax credits but not for Section 1402 reimbursements to insurers. Such an appropriation cannot be inferred.”

The Obama administration argued that blocking the payments would lead to “absurd economic, fiscal, and healthcare-policy results.” The judge’s response was constitutionally and legally sound:

The only result of the ACA, however, is that the Section 1402 reimbursements must be funded annually. Far from absurd, that is a perfectly valid means of appropriation. The results predicted by the [administration] flow not from the ACA, but from Congress’ subsequent refusal to appropriate money.

In other words, if you have a problem with the lack of appropriation, take it up with the House and Senate.

Technocrats of all ideological stripes consistently find the Constitution frustrating. If it weren’t for that pesky document, benevolent dictators could all pen and phone their way to utopia.

Technocrats of all ideological stripes consistently find the Constitution frustrating. If it weren’t for that pesky document, our benevolent dictators could all pen and phone their way to utopia. But there are good reasons for leaving appropriations to Congress. As Josh Blackman reminded us in an outstanding and comprehensive piece in National Review Online last year, James Madison wrote in Federalist 58 that “this power over the purse may, in fact, be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people.”

Every two years we elect the entire House and one-third of the Senate. There is thus a constant potential check on government expenditures. The fact that Congress rarely checks that spending makes its power no less legally real nor any less constitutionally necessary. And, by the way, judges do not exist to correct subjectively determined deficiencies in the elected branches’ policy-making.

While there are many reasons to complain about the Trump administration’s approach to the Constitution, his decision to end illegal subsidies is exactly right. If defenders of Obamacare want to blame anyone, they can blame their own side. When Democrats controlled the government and could fashion the law how they liked, they provided for annual appropriations. That was their decision. If they want to “fix” that law now, they can either make a deal or win elections. Continuing to violate the Constitution, however, is not a viable choice.

READ MORE:

NR Editorial: Trump’s Sensible Health-Care Actions

The Constitution Finally Takes Precedence over Obamacare

Trump Increases Health-Insurance Affordability

David French — David French is a senior writer for National Review, a senior fellow at the National Review Institute, and a veteran of Operation Iraqi Freedom.

Most Popular

Culture

Responsibility and Blame

David L. Bahnsen has written a book on themes dear to my heart. It’s called “Crisis of Responsibility: Our Cultural Addiction to Blame and How You Can Cure It.” I have done a Q&A with the author, here. Thinking about his book, I remembered a few things — and shared them with David in our podcast. ... Read More
Culture

Monday Links

The Guy Who Makes the World’s Best Paper Airplanes. The Theater That Shakespeare Stole. The Invention of the Baby Carrot Phrases commonly used today which are derived from obsolete technologies. This device was used to resuscitate canaries in coal mines. The Surprisingly Complex Design of the ... Read More
World

Richard Pipes, Historian of Totalitarianism

‘My subject is the Russian Revolution, arguably the most important event of the twentieth century. It is my considered judgment that, had it not been for the Russian Revolution, there would very likely have been no National Socialism; probably no Second World War and no decolonization; and certainly no Cold ... Read More
Culture

School Shootings and the Incentives of Violence

Today’s Morning Jolt discusses school shootings and the common difficulties of the teenage years, and I thought of another aspect that I forgot to include -- the degree to which our society, in its reaction to violence, inadvertently rewards that violence. Every teenager wants attention, to be recognized, to ... Read More
NR Marketing

Down the Home Stretch

Our Spring 2018 Webathon winds up this week. El jefe, Mr. Lowry, makes the case, wonderfully, for your participating, even at this final stage. In case you need some visual inspiration, we’ll use this horse race image from the novel Ben Hur (you'll remember the 1959 movie version starred the late NR ... Read More