May 27, 2016

May 27, 2016 | Commentary on Health Care, Obamacare

Congress Receiving Unconstitutional Obamacare Subsidies

In our constitutional republic, it not only matters what officials do, but also how they do it. Constitutional policy ends can be pursued only by constitutional means.

That understanding lies at the heart of the recent decision in United States House of Representatives v. Burwell. There, the Federal Court for the District of Columbia declared the Obama administration’s disbursement of health insurance cost-sharing subsidies to be unlawful [4], because Congress didn’t appropriate the funds. Article I, Section 9, clause 7 of the Federal Constitution reads in part: “No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law. . .”

Ironically, House leaders celebrating this court victory are direct beneficiaries of the very same executive overreach. Current congressional health insurance subsidies are also being disbursed without any congressional authorization or appropriation. Sen. Ron Johnson (R-Wis.) filed suit to block these special subsidies [5], but his case was dismissed for lack of standing.

It’s a complicated story [6]. In March of 2010, Congress enacted the Affordable Care Act, including Section 1312 (d)(3)(D). The relevant section reads:

“Notwithstanding any other provision of law, after the effective date of this subtitle, the only health plans that the Federal Government may make available to members of Congress and congressional staff with respect to their service as a member of Congress or congressional staff shall be health plans. (I) created under this act (or an amendment made by this act); or (II) offered through an exchange established under this act (or an amendment made by this act).”

In short, as of 2014, members of Congress and their staffs were not eligible for health coverage in the Federal Employee Health Benefits Program (FEHBP); they had to enroll in Obamacare.

Notice, though, that the language does not provide for any health insurance subsidies, other than those available to all other Americans in the health insurance exchanges. Notice, too, the language does not grant any regulatory authority to the U.S. Office of Personnel Management (OPM), the agency that regulates plans and oversees employer subsidies in the FEHBP, the program that previously covered congress and staff.

The legislative history of this provision is intriguing [6]. Toward the end of the Senate debate on Obamacare, on March 24, 2010, Sen. Charles Grassley offered Amendment 3564 to provide insurance subsidies to congress and staff, and to include the president and all executive-branch political appointees in Obamacare coverage. Sen. Grassley’s amendment was defeated on a procedural vote of fifty-six to forty-three; all Senate Democrats voted against it. In voting down the amendment, the Senate voted down the insurance subsidies.

Members of Congress probably didn’t know what they were doing. After the horror of it all sunk in, meeting behind closed doors, they quickly launched a three-year search for various ways to escape the mess they had created for themselves.

The politics were positively ugly. With the sure prospect of millions of Americans losing their health plans, congressmen voting themselves back into FEHBP coverage would have been nothing short of scandalous. The prospect of having to take a recorded floor vote to give themselves special funds to help pay for their Obamacare coverage had zero political appeal as well. In the end, members of Congress neither authorized nor appropriated any special subsidies for their new coverage.

Instead, congressional leaders begged President Obama to fix their mess for them. It worked. In August 2013, the president’s OPM said FEHBP subsidies would be available for congressmen [7] enrolling in health exchange plans.

This was a bold move, even for Team Obama. Not only did the original statutory language fail to provide insurance subsidies, but OPM also had no authority under Chapter 89 of Title 5 of the U.S. Code to provide FEHBP subsidies to non-FEHBP plans. In fact, as Politico reported [8], OPM had concluded—before the president intervened—that it had no such authority.

The scheme then went from the bold to the ridiculous. In the FEHBP, under Section 8901(6) of Title V, the health plans must be “group” plans. So, no problem: OPM certified the DC SHOP exchange, reserved for firms with fewer than fifty employees, as the health insurance exchange for Congress. All Congress had to do was to somehow turn itself into a small business, with fewer than fifty employees. And, incredibly, that is exactly what unnamed congressional bureaucrats did: They submitted paperwork identifying each chamber of Congress as a small business, [9] employing forty-five people apiece.

Bottom line: Federal lawmakers and their staff members would get generous health insurance subsidies, administratively provided by OPM, without a congressional appropriation—just like the cost-sharing subsidies recently struck down as unconstitutional by the Federal Court of the District of Columbia.

Sen. David Vitter recently placed a “hold” on President Obama’s nomination of Beth Cobert to become the Director of OPM [10] until the special subsidy issue is resolved. Sen. Vitter has long been a critic of this OPM scheme, and has tried to undo it [11]. If this controversy ever gets into federal court, OPM can point to no precedent to justify its actions—and no federal court will find one—because in the fifty-six years of FEHBP history, the agency had never previously channeled FEHBP subsidies outside of the FEHBP program.

Just like the illicit provision of cost-sharing subsidies, the OPM case is a textbook example of presidential overreach. Both cases involve the violation of the Constitutional separation of powers. Sen. Vitter’s effort is not, therefore, a minor spat over a mere “policy matter.”

Congressional leaders are right to celebrate their federal court victory as a vindication of the Constitutional power of the purse [12], though it will be appealed. That power is at the very heart of representative government. For members of Congress, their dedication to constitutional principle is best tested when its defense involves personal sacrifice, such as a repudiation of the administration’s goofy rationalization for congressional health insurance subsidies. Beyond enacting good public policy, fidelity to the Constitution should be job number one.

About the Author

Robert E. Moffit, Ph.D. Senior Fellow
Center for Health Policy Studies

Related Issues: Health Care, Obamacare

Originally appeared in The National Interest