TRUMP’S EXECUTIVE ORDER ON HEALTH CARE — CAN IT UNDERMINE THE ACA IF CONGRESS FAILS TO ACT?

Original story by Timothy Stoltzfus Jost, J.D., and Simon Lazarus, J.D.

Within hours after taking the oath of office, President Donald Trump executed his first official act: an executive order redeeming his campaign pledge to, on “day one,” begin repeal of the Affordable Care Act (ACA).1 The New York Times characterized his action as itself “scaling back Obamacare,” and the Washington Post said the order “could effectively gut [the ACA’s] individual mandate” to obtain health insurance coverage. But consumer advocate Ron Pollack dismissed Trump’s action as “much ado about very little.”

To put these divergent assessments into perspective, it’s important to examine the actual executive order, recognize the departures from the Obama administration that it contemplates, and assess the scope and significance of changes the administration can lawfully make by executive order or other administrative actions.

President Trump cannot repeal the ACA by executive order. The ACA is a statute, enacted by Congress, which under the Constitution only Congress can repeal or modify. Furthermore, the order does not itself change existing regulations. Rather, it provides instructions or guidelines as to how Trump wants responsible agencies to exercise their discretion in interpreting and applying statutory requirements. The order appropriately recognizes that the new priorities it outlines can be followed by administration officials only “to the maximum extent permitted by law.”

The new priorities set out in the order are to “waive, defer, grant exemptions from, or delay the implementation of any provision,” in order to minimize costs and regulatory burdens imposed on states, private entities, and individuals; “provide greater flexibility to States”; and “encourage . . . a free and open market in . . . healthcare services and health insurance.”

Unsurprisingly, the new president’s policies differ from those of his predecessor, who repeatedly stressed that his top priority was to “ensure that all Americans have access to high-quality, affordable health care.”2 The salient question, however, is whether the new administration’s policy preferences square with the goals prioritized in the ACA itself.

Congress explicitly indicated that its priority in adopting the ACA was to “provide affordable health care for all Americans,” primarily by expanding access to health insurance and Medicaid for consumers with low or moderate incomes or preexisting conditions. To be sure, cutting private-sector costs, providing state flexibility, and encouraging free markets may be appropriate factors for officials to consider in implementing virtually any law. But these policy priorities cannot be implemented in such a way as to render inoperable the goals and priorities integral to the ACA’s statutory scheme. Giving primacy reflexively to the executive order’s directions across the board, if it results in disregard for the statute itself, will actually weaken the administration’s legal defense of specific administration initiatives to contract the ACA.

The Trump administration’s hopes to replace the Obama administration’s policies and requirements “immediately” are likely to be frustrated because provisions of the ACA have been implemented primarily through rulemaking under the Administrative Procedure Act (APA) and can therefore only be changed through rulemaking. Detailed regulations govern, for example, the essential health benefits that insurers must cover in the individual and small-group markets, the bans on exclusions for preexisting conditions and on annual and lifetime coverage limits, procedures for claiming premium tax credits and cost-sharing reductions, coverage of adult children on their parents’ policies to age 26, and many other key provisions of the ACA.

The APA requires agencies that wish to adopt regulations binding on the public — or that want to modify, repeal, or replace existing regulations — to publish proposed rules in the Federal Register, allow interested parties time to submit comments, and publish a final rule responding to comments and explaining their reasoning for rejecting (or accepting) them, including their reasoning for changing an existing rule. The Trump executive order explicitly acknowledged that federal agencies must follow the APA. Indeed, the administration has just released a proposed rule aimed at adjusting some regulations to stabilize insurance markets.

Many ACA regulations have been refined through administrative “guidance.” For example, the Obama administration issued guidance in 2015 detailing requirements that states must meet to receive innovation waivers under an ACA provision that authorizes states to propose different approaches to implementing ACA goals. Administration officials could alter earlier waiver guidance without encountering lengthy rulemaking delays. But new waiver guidance would still have to comply with existing procedural requirements governing waivers — and of course with underlying statutory waiver provisions. Both are quite specific.

Some observers have speculated that the Trump administration might simply stop enforcing ACA requirements — for example, cease collecting tax penalties for noncompliance with the individual mandate or stop requiring insurers to cover the ACA’s essential health benefits. For its part, the Obama administration was criticized for delaying enforcement of the ACA’s mandate that requires large employers to cover their employees or pay a tax and for allowing states to permit individuals to keep noncompliant health insurance plans beyond the 2014 effective date of the ACA reforms.

But whatever one thinks about the Obama administration’s actions, it is one thing to delay temporarily a legal requirement or to phase in a new law to facilitate adjustments by affected people or entities; it is quite another to refuse outright to enforce a law already in force, with the aim and effect of undermining that law.3 The Supreme Court has said that courts may step in to correct any such “abdication” of the executive branch’s duty to faithfully execute the law. In fact, the Internal Revenue Service announced on February 15 that it is still enforcing the individual mandate, although it will not be beginning a new program to tighten up enforcement at this time.

Some commenters have suggested that rather than refusing to enforce the individual mandate, the administration might simply try to hollow it out, relying on the authority the ACA gives the Department of Health and Human Services to grant “hardship” exemptions from the mandate. The Obama administration recognized some categories of hardships, and the Trump administration could recognize more. But expanding hardship exemptions broadly enough to render the mandate meaningless would be forcefully challenged in court. Congress could not have meant to authorize exceptions that, in effect, swallow the rule.

In a critical 2015 Supreme Court case upholding nationwide availability of ACA “premium assistance” tax credits for eligible low-income insurance purchasers, Chief Justice John Roberts held that courts and agencies must interpret and apply individual provisions of a law — indeed, of the ACA in particular — so as to further its overall “legislative plan.” Roberts concluded: “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them. . . . [W]e must interpret the Act in a way that is consistent with the former, and avoids the latter.”4 A de facto blanket hardship waiver would seem difficult to square with this standard.

Over time, the Trump administration will undoubtedly revoke or amend Obama administration rules or guidance. But major changes in the ACA’s regulatory environment will require the cooperation of several federal agencies and often state regulators as well.

Precipitous changes in the enforcement of the law would severely disrupt insurance markets, with political, no less than policy or humanitarian, consequences. The Congressional Budget Office projects that gutting the law would lead comparatively healthy people to drop coverage, forcing insurers to raise premiums or withdraw from markets altogether. Such actions would, in turn, further shrink the insurance pool, raise premiums, and reduce insurance availability — resulting in an increase of 18 million in the number of uninsured Americans by 2018.5 Mulling such prospects, Republican strategists, both in and outside the administration, are reportedly already having second thoughts about precipitously sabotaging the ACA.

 

Disclosure forms provided by the authors are available at NEJM.org.

This article was published on February 22, 2017, at NEJM.org.

Source Information

From Washington and Lee University School of Law, Lexington, VA (T.S.J.); and the Constitutional Accountability Center, Washington, DC (S.L.).