Subsidies Under the Affordable Care Act

I would be curious to hear opinions from people who know more about health law than I do. I can think of three ways to understand the President’s decision to stop certain subsidies to participants in the insurance exchanges.

  1. The subsidies are illegal because there was no appropriation for them. This is the position of the House Republicans in litigation pending before the DC Circuit.
  2. The Act gives the President discretion to give subsidies.
  3. The Act gives the President no discretion (or not enough) and thus any cancellation of the subsidies is an unlawful impoundment of funds.

Which one is correct? Or is there a fourth option?

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6 Responses

  1. Brett Bellmore says:

    The issue, as I understand it, is that the payments are authorized in the case of exchanges established by a state. But some of the states exercised their discretion to not create exchanges, whereupon the federal government proceeded to create exchanges in those states. The Obama administration then made payments in the case of *both* sorts of exchanges.

    1) Seems a fairly plausible answer if you’re a textualist. The law in question does make the distinction, after all.

    2) Is, I suppose, defensible if you are not, since you don’t care about what the words say.

    3) I don’t really see how you get here, to a place where the President lacks discretion to comply with the literal word of the law.

  2. Mike Stern says:

    I don’t think anyone argues that the president has discretion here. Either the subsidies were appropriated or they weren’t. It seems pretty clear that they weren’t, as Judge Colliyer held. Whether this represented a conscious choice on Congress’s part or just an oversight is debatable.

    If the courts reach the merits in the lawsuit the states are bringing, I think they will side with the Trump administration ( as difficult as that may be for them). Otherwise they would have to hold that the executive branch can find implied appropriations, which would effectively transfer the power of the purse to the president.

  3. Mike Stern says:

    Also, Brett, you are thinking of a different issue. This is about the cost sharing subsidies, which don’t turn on whether a state has established its own exchange.

    • Brett Bellmore says:

      There are so many ways the ACA has been implemented contrary to the statute that created it, they’re hard to keep track of.

  4. Joe says:

    The matter splits reasonable minds even if some think one side or the other is “pretty clear.” [See, e.g., a recent LA Times op-ed finding the Obama interpretation a stretch, but not supporting Trump/Republican’s path either.]

    Unless there is clear error, which in the scheme of things amounts to a judgment call tbh, the matter should have been left to the courts, giving more time for a legislative solution. Mix this in with the pragmatic problems including how this will play out, the path here is ill advised.

    The other issue is that ACA, even if one thinks specific appropriations are required, requires Congress (“shall”) to fund. Like a treaty with enabling legislation, Congress is not fulfilling its duties under the statute. The statute in effect trusts Congress with ongoing responsibility here given the complex nature of health insurance.

    Obama’s actions were not always ideal here, but like the debt ceiling alternatives spelled out by Michael Dorf & Neil H. Buchanan, the Republican Congress’ actions made the alternative far from ideal too. But, some parties wish to only blame one side. This is where the “discretion” comes in, not in some artificial vacuum. As with Republicans refusing to let Democrats that passed something with a supermajority to even clean-up the final bill (leading to problems), it is “pretty clear” the whole story has to be told here.

    • Brett Bellmore says:

      ” Like a treaty with enabling legislation, Congress is not fulfilling its duties under the statute. ”

      With the difference, of course, that treaties are, legally, a higher obligation than statutes.

      An unpopular law was passed by a straight party line vote, by a party that almost instantly lost its majority, in no small part because of passing that law. So, naturally, the party that opposed, and became the majority on the basis of that opposition, is somehow obligated to do its best to implement it, right?

      No, I don’t think it works that way.