After filing a lawsuit to defend its constitutional “power of the purse” more than three years ago, the House of Representatives late Friday proposed a settlement in the case over Obamacare’s cost-sharing reduction payments to insurers. In their fight to preserve the House’s constitutional authority, and stop propping up Obamacare, the proposed settlement would give conservatives precious little.
The House originally filed suit to accomplish three objectives: 1) halt the cost-sharing reduction payments; 2) keep a future administration from restarting the payments; and 3) set the precedent that the legislative branch can file suit against the executive when the executive exceeds its constitutional authority.
The settlement as proposed accomplishes exactly none of the House’s initial objectives. On the first count, the settlement would by definition do nothing, as President Trump already halted the payments in October. On the second, it would cede significant territory, allowing President Trump—or any future president—to restart the unconstitutional payments to insurers at any time. On the third count, the lawsuit would leave undetermined the question of whether Congress can sue the executive, with the House forfeiting the chance to have the question resolved on a case whose merits—the executive spending funds without any explicit appropriation—seem strong.
The Issue and the Lawsuit
The dispute involves Obamacare’s cost-sharing reduction (CSR) payments, designed to lower deductibles and co-payments through taxpayer subsidies for individuals purchasing exchange coverage. The law instructed insurers to lower cost-sharing for certain low-income individuals, and instructed the Department of Health and Human Services to reimburse insurers for providing these discounts, but included no explicit appropriation for the reimbursements.
Despite the lack of an express appropriation, the Obama administration started making CSR payments to insurers when the exchanges launched in 2014. The House of Representatives, viewing those actions as violating its constitutional authority, sued to stop the payments that fall.
In September 2015, Judge Rosemary Collyer ruled that the House had standing to challenge the constitutionality of the Obama administration’s actions in court. In May 2016, Collyer also agreed with the House on the merits, ruling that Obamacare lacked an appropriation for CSRs, that the Obama administration overstepped its authority, and that the payments must cease unless and until Congress provided an explicit appropriation.
However, Collyer stayed her ruling stopping the payments pending an appeal, which the Obama administration filed with the U.S. Court of Appeals for the District of Columbia last year. Upon taking office, the Trump administration requested extensions in that case, to attempt to find a resolution with the House.
Over the summer, a group of Democratic state attorneys general asked for, and received, permission from the Court of Appeals to intervene in the House’s lawsuit. The attorneys general argued that the change in administration meant neither party to the case would properly represent their interests in ensuring Obamacare’s implementation.
The Proposed Settlement
In Friday’s filing, all three parties—the Trump administration, the House, and the Democratic attorneys general—asked the Court of Appeals to remand the case to Collyer, and for Collyer to accept their settlement arrangement. The settlement would have Collyer vacate her order preventing the executive from making CSR payments.
Regarding other elements of the dispute and the status of CSR payments going forward, the proposed settlement includes this paragraph:
The Parties recognize that the Executive Branch of the United States Government (‘Executive Branch’) continues to disagree with the district court’s non-merits holdings, including its conclusion that the House had standing and a cause of action to bring this suit. The Parties agree that because subsequent developments have obviated the need to resolve those issues in an appeal in this case, the district court’s holdings on those issues should not in any way control the resolution of the same or similar issues should they arise in other litigation between the House and the Executive Branch. The Parties also recognize that the States continue to disagree with the district court’s merits holding. Accordingly, if the court of appeals grants the Joint Motion, the Parties agree that the district court’s holding on the merits should not in any way control the resolution of the same or similar issues should they arise in other litigation, and hereby waive any right to argue that the judgment of the district court or any of the district court’s orders or opinions in this case have any preclusive effect in any other litigation. [Emphasis mine.]
In sum, the settlement treats the standing and merits claims differently. On the question of whether the House has standing to sue the executive, Collyer’s ruling will not represent a controlling precedent, but the House will be able to cite Collyer’s ruling in future lawsuits pitting Congress and the executive.
On the merits—i.e., whether a CSR appropriation exists, and whether the Obama administration acted constitutionally in making said payments—Collyer’s opinion will not control, and none of the parties can cite it in future litigation.
What the Settlement Means
The House “wins” things it already has. The House already won the action it most desired when President Trump agreed to stop the CSR payments in October. Beyond that, the settlement gives the House the right to cite Collyer’s ruling in future cases between Congress and the executive—which it would have done regardless.
The House gives up what it won. By vacating Collyer’s injunction, the settlement allows President Trump, or any future president, unilaterally to reinstitute the CSR payments at any time. Moreover, because the settlement prohibits all parties from using Collyer’s ruling that an appropriation does not exist “in any other litigation,” it will inhibit the House’s ability to protect its institutional prerogatives should any administration attempt to restart the unconstitutional CSR payments in the future.
Uncertainty over CSRs will persist. Most worrisome for policymakers, the settlement will create perpetual uncertainty over the CSR payments. Cost-sharing reductions could easily begin to resemble the “Mexico City policy”—a political pendulum that swings back-and-forth, with Democratic administrations making the payments, and Republican administrations possibly not doing so. If this dynamic occurs, insurers will have a difficult time setting accurate premiums, particularly in election years, when insurers will not know the identity of the future administration.
The Susan Collins Effect? Sen. Susan Collins has insisted that Congress enact legislation appropriating CSR funds before voting to pass a tax bill that repeals the individual mandate. Last week, she repeated assertions from Senate Republican leaders and Vice President Mike Pence that insurers will receive the payments, even as conservatives in the House have objected to passing an appropriation for CSRs. Some may question the timing of this settlement—which, by ending the House’s lawsuit, would give the Trump administration clear sailing to resume the payments unilaterally—and ask whether the administration will now attempt to do so.
Will Other Parties Object?
Given the implications listed above, other parties could object to the settlement. Attorneys general in Republican states, who believe the law clearly lacks an appropriation for CSR payments, could object to the settlement vacating Collyer’s prohibition on the executive making such payments.
Moreover, because the settlement would not resolve the underlying legal issues, those attorneys general would have grounds to intervene—namely, the uncertain regulatory environment that the lack of a definitive ruling on CSRs would create, and the higher costs to state insurance offices due to that uncertainty. Insurers and insurance commissioners would have similar reasons to object to the settlement, although insurers may not wish to “risk” a definitive court ruling stating that a CSR appropriation does not exist.
Regardless, the proposed settlement provides little in the way of tangible results to conservatives who objected to the unconstitutional CSR payments. Conservative members of Congress may therefore wish to state their objections to House leadership, to convince it to change course.
Mr. Jacobs is founder and CEO of Juniper Research Group, a policy consulting firm based in Washington. He is on Twitter: @chrisjacobsHC.