The Cost-Sharing Reduction Payment elimination – right, and yet . . .

Last updated on: October 13, 2017 at 4:06 pm by Jane the Actuary

The Cost-Sharing Reduction Payment elimination – right, and yet . . . 2017-10-13T16:06:00-06:00 Jane the Actuary

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The news today is that Trump has eliminated the Cost-Sharing Reduction payments. This is a component of Obamacare in which insurers are reimbursed for their costs in meeting the law’s requirement that individuals with incomes less than 250% of the poverty line, be able to purchase high-deductible plans without actually being (fully) subject to the deductible and other cost-sharing requirements. This is being treated as a great scandal by Obamacare supporters, and being celebrated by Obamacare opponents. Here’s one reaction in a Politico report,

“What it adds up to me is a gross dereliction of duty,” John Baackes, CEO of L.A. Care Health plan, said of the decision. “The Affordable Care Act is still the law of the land and the cost-reduction subsidies are part of that. … Even if there’s a lawsuit about it, it should still be honored until the last appeal is exhausted. I thought they took oaths to uphold the law of the land. They’re just flaunting it now.”

But, of course, near as I can tell, the claims by Trump that these subsidies violate the law, are correct. Here’s a nugget from the Volokh Conspiracy blog:

[C]ongressional Republicans filed a lawsuit contending that these payments are illegal. In May 2016, federal district Judge Rosemary Collyer ruled in favor of the plaintiffs, though she stayed her judgment pending a possible appeal.

The Constitution clearly mandates that only Congress has the power to appropriate federal funds, not the executive. Article I, Section 9, cl. 7 states that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

Which means that, from what I can tell, what Trump did was actually appropriate. These are funds that, according to the law and based on the constitutional authority of the president, cannot be spent without an appropriation from the House. Is there a reasonable contrary view? So far as I can tell, the only defense of the continued payment of the un-appropriated subsidies is that it’s unfair and mean-spirited to discontinue them; I haven’t seen a defense of the law itself. In fact, if I am understanding this description of the Obama administration’s defense of the subsidies correctly, even then, they defended the un-appropriated subsides on the basis that it would be a Bad Thing for the subsidies to be discontinued. This analysis, at Health Affairs Blog, also says that the tax credit subsidies for the exchanges was, in comparison, permanently appropriated, and is thus different than the CSRs:

The judge’s opinion begins with a recitation of the constitutional appropriations clause. She proceeds to cite authority for the proposition that “an appropriation must be expressly stated; it cannot be inferred or implied.” Judge Collyer finds an explicit permanent or continuing appropriation for APTCs under section 1401 of the ACA, which added section 36B to the Internal Revenue Code. In adopting the ACA, Congress also amended the long-standing permanent appropriation for tax refunds, section 1324 of the Internal Revenue Code, to cover the funds the IRS would have to pay out for APTC. Congress did not, however, Judge Collyer concludes, provide a similar permanent appropriation for CSRs under 1402. Indeed, it did not, and has not since, appropriated money to fund the CSR program.

And this would be a non-issue if, alternately, either there had been consensus on Obamacare in the first place or a reasonable degree of acceptance now, or if Congress had been able to agree on a repeal program that itself had a reasonable degree of support. In the former case, it’d then be either “oops, let’s amend the law” or else it would fall into that category of things that the GOP grumbles about but in the end signs off on in the sort of negotiations that take place. In the latter case, we’d be grumbling about the GOP’s version of healthcare instead.

Which means that my bottom line is that fundamentally, this is something for Congress to do or not do. If these CSR payments are to be made, Congress needs to appropriate the funds. We shouldn’t be arguing about whether Trump is a big meanie. It’s in Paul Ryan’s court, and they are the ones making the decision not to appropriate.

Which might have made sense in 2014, for the House to use this as a means of bringing Obama to the negotiating table. But as it is, this just makes the House seem childish and petulant. The leadership of the House and Senate have both shown themselves to be insufficiently capable of designing healthcare legislation that functions adequately enough as a compromise to get passed. And, yes, I get that they have to wrangle a consensus from a mix of people who object to any government subsidies at all, and those who are just fine with subsidies but want them to be intelligently designed. But the mature, responsible response would have been to appropriate funds for the CSRs until they can indeed identify an alternative. Playing a game of “let Obamacare explode to force the issue” is irresponsible.

So, again — this is not a matter of Evil Trump cruelly taking away Americans’ healthcare. This is for Congress to deal with.

And, yes, we can discuss the “association health plan” and “crossing state lines” issues at another time.

Image: https://commons.wikimedia.org/wiki/File%3ADoctor_examines_patient_(1).jpg; By Unknown photographer [Public domain], via Wikimedia Commons

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Congress is incompetent

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