Nearly 18 months ago, I noted in these pages the “likelihood of a legal challenge” to a Biden administration proposal to make eligible for Obamacare subsidies certain illegal immigrants. That legal challenge just became a reality.
On Thursday, a series of Republican attorneys general, led by Kansas’ Kris Kobach, filed suit in federal court in North Dakota seeking to strike down this change. The rule, which the Biden administration finalized this spring, redefines the term “lawfully present” to make participants in the Deferred Action for Childhood Arrivals (DACA) program eligible for Exchange subsidies.
AGs Allege Violations of Federal Law
The complaint alleges that the final rule violates two provisions of federal law. First, the 1996 federal welfare reform law prohibited the receipt of taxpayer-funded benefits to non-qualified aliens “notwithstanding any other provision of law.” Because DACA recipients do not meet the definition of “qualified aliens,” the welfare law prohibits them from receiving benefits, irrespective of what Obamacare says.
The lawsuit also alleges that DACA recipients are ineligible for subsidies under the statutory definition included in Obamacare itself. The complaint notes that the Centers for Medicare and Medicaid Services’ (CMS) “determination that deferred action recipients are lawfully present is obviously a self-contradiction: it defines as ‘lawfully present’ the class of individuals whom [the Department of Homeland Security] is deferring removal action based on their unlawful presence” (emphasis original).
The suit cites both an 11th Circuit Court of Appeals ruling from 2019 that emphasizes that the DACA program “does not mean that [participants] are in any way ‘lawfully present,’” as well as a 5th Circuit Court of Appeals ruling questioning DACA’s own legality. It claims that the Biden administration’s latest action violated the above-referenced laws and was made in an arbitrary and capricious manner, without considering the potential costs to states, reconciling contradictions with existing statutes, or providing a reason for changing an interpretation of the law that has existed for over a decade.
Standing Is a Concern
When the administration released its final proposal back in the spring, it made DACA recipients eligible for subsidies on the Obamacare Exchanges but not the Medicaid expansion to able-bodied adults (in those states that are participating in the expansion). The final rule claimed its deferral of the Medicaid proposal related to the “unwinding” states are undertaking to remove ineligible individuals from the rolls for the first time since the Covid pandemic.
But I noted in May that the possibility of a legal challenge provided the real reason why the administration decided not to finalize the Medicaid component of the proposed rule:
By making DACA recipients eligible for Exchange subsidies (fully paid for by the federal government) instead of Medicaid (paid for by the states and Washington), the Biden administration is trying to avoid giving states standing to mount a legal challenge. In fact, the administration stated elsewhere in the regulation that the change “does not require states to fund additional outreach and enrollment activities as a result of this rule.” Apparently, the administration wants to avoid imposing any new costs on states — in Medicaid, on the Exchanges, or otherwise — because if courts grant a state standing to challenge part of the rule, it could create an opening to strike the entire rule down.
In the complaint, the states advanced two arguments intended to give them grounds to challenge the administration’s action. First, the states claimed that providing subsidies to DACA recipients will encourage illegal immigration and that illegal immigration already poses significant costs to states. While a compelling policy argument, courts may look more skeptically at these types of general claims. Although one can understand intuitively that providing benefits encourages illegal migration — even Hillary Clinton admitted as much — definitively proving that this specific change caused specific individuals to migrate, and imposed specifically higher costs on states, becomes more difficult.
However, the complaint also notes that Idaho and Virginia administer their own state-run Exchanges. As such, it notes that “expanding eligibility for [Obamacare] coverage will impose additional administrative and resource burdens on states … by allowing additional persons to use such Exchanges.” While CMS claimed in the final rule that states will not incur “additional outreach and enrollment activities,” accepting and processing more subsidy applications will impose costs on states running their own Exchanges. Those higher costs should provide Idaho and Virginia with legal standing to challenge the final rule.
Kamala Harris Supports Alien Coverage
The suit also provides a timely reminder that the presumptive Democrat nominee for president, Kamala Harris, supports providing taxpayer-funded health coverage to individuals illegally present in the country:
While Harris has since renounced her support for a single-payer system of socialized medicine, she has not budged an inch from her statements regarding coverage for illegal aliens. If Harris ever deigns to answer questions from reporters — and if the Washington press corps ever decides to ask a Democrat presidential candidate tough questions — perhaps she should explain why she supports a Biden administration initiative that will increase illegal migration and quite possibly violates federal law to do so.
