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Health Care

Rule of Law Actually Applies to Democrats, Too

Those critiquing Trump for flouting norms should take a look at Obamacare's unauthorized spending.

Monday put two of my favorite topics in the headlines: Donald Trump, and cost-sharing reduction payments. Plenty of folks have spilled plenty of ink on that first problem. Let's spare a moment for the second. Cost-sharing reduction payments, a subsidy built into Obamacare, are not just a policy problem, but a potent symbol of the larger political disease ailing our nation.

They were designed to address a real challenge: similar policies may have very different effects at different income levels. Say you make $75,000 a year, and your health insurance policy has a $5,000 deductible. If you get something serious, something expensive -- well, ouch, that's going to hurt your budget, but you'll scrape together the $5,000 and get the care that you need. If you have the same policy but earn only $25,000 a year … ummm, you don’t really need that liver transplant, do you?

So Obamacare required insurers to make special accommodations for people whose incomes were below 250 percent of the poverty line. The companies have to provide these individuals with silver plans (the second-lowest benefit tier) with lower deductibles and co-payments. This is, of course, quite expensive for insurers to do. So the Patient Protection and Affordable Care Act also granted subsidies to go to the insurers to cover the cost. Well, to be precise, lawmakers who dreamed up Obamacare promised the payments to insurers, but did not appropriate any money to actually pay them.

Yes. Congress can mandate subsidies without also mandating a funding source. Medicaid is another example. This is crazy, but there it is.

For once the Constitution is admirably clear on how the executive branch should handle this quandary: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.” The law appropriated no money for these cost-sharing reduction payments. But the Obama administration went ahead and paid them anyway.

The House of Representatives then sued the Obama administration to halt those payments. That’s how Trump and the cost-sharing reduction ended up in headlines together: The Trump administration was on deadline to decide what to do about the case, which is currently wending its way through the courts. (SPOILER ALERT: They punted.)

This whole mess illuminates sadly well our current tug-of-war over the rule of law -- what it means, and how much it matters.

To be clear, there are good technical arguments for paying the subsidies. Insurers have to offer the cost-sharing reductions, and it may be that the government even has to pay them, because the companies can sue the government to get what they're owed. (While the government has not appropriated money for the cost-sharing reduction, it has appropriated money to settle lawsuits. Nicholas Bagley makes the case that declining to pay for the cost-sharing reductions will do nothing more than make it extra-expensive and super-annoying for insurers to get the payments due them.)

What seems to be missing is good legal arguments in favor of making these payments as the Obama administration did. While there’s a fascinating side-argument about whether the House has standing to sue (legally it may not), I have not seen any convincing arguments that, as a matter of law, the administration was entitled to go ahead and gaily spend unappropriated money. Even the Obama administration appears to have believed it needed an appropriation, because officials sought one from Congress and decided it was unnecessary only after failing to get it.

Yet the outcry about the rule of law on this issue has been, let us say, somewhat limited. Indeed, I’ve seen plenty of people who are very worried about Trump’s rule-of-law infringements -- and also seem to think the cost-sharing reduction payments ought to get made on schedule.

Is it any surprise, then, that many Trump supporters suspect that all this “rule of law” and “norm” talk is just another rigged game where they’re the designated marks? Yes, there can be differences in degree and kind—for example, I think that firing an FBI chief who is investigating your campaign is much more worrying behavior than illegally handing mandated subsidies to insurers, because one opens up potentially dangerous avenues of political repression and corruption, and the other one doesn’t. 1 But defenders of the rule of law must be scrupulous about observing that rule’s limitations themselves, even in small matters, because the sole power of the rule of law is that it involves neutral principles that apply to both sides.

Whatever the Obama administration’s intentions, officials weakened our civic institutions when they repeatedly exceeded the limits of executive power by spending unallocated money. And those who failed to say so will struggle to make others listen when they complain about Trump.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

  1. And no, Trump supporters, this argument does not hinge on any claim about whether Trump is corrupt and politically repressive. I am suggesting that a custom of firing your FBI chief at will would be a welcome tool to any politician who wished to go in that direction, which is why we’d best discourage any president from using it.

To contact the author of this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor responsible for this story:
Philip Gray at philipgray@bloomberg.net

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