There is considerable doubt that the President’s announced “administrative fix” is either workable or legal. What Obama proposes does not change anything in the Affordable Care Act. His plan is to not enforce the provisions of the law that caused insurance companies to cancel policies for millions of people. Inquiring minds want to know, “Where in the Constitution does the President get the power to not enforce the law as it is written?”
From Jonathan Adler:
The legal requirement remains on the books so the relevant health insurance plans remain illegal under federal law. The President’s decision does not change relevant state laws either. So insurers will still need to obtain approval from state insurance commissioners. This typically requires submitting rates and plan specifications for approval. This can take some time, and is disruptive because most insurance companies have already set their offerings for the next year. It’s no wonder that some insurance commissioners have already indicated they have no plans to approve non-compliant plans.
Yet even if state commissioners approve the plans, they will still be illegal under federal law. [See clarification below.] Given this fact, why would any insurance company agree to renew such a plan? It’s nice that regulators may forbear enforcing the relevant regulatory requirements, but this is not the only source of potential legal jeopardy. So, for instance, what happens when there’s a legal dispute under one of these policies? Say, for instance, an insurance company denies payment for something that is not covered under the policy but that would have been covered under the PPACA and the insured sues? Would an insurance company really want to have to defend this decision in court? After all, this would place the insurance company in the position of seeking judicial enforcement of an illegal insurance policy. If there’s an answer to this, I haven’t seen it [but see below]. It’s almost as if the Administration has not thought this through.
The new policy announced by the President does not alter any of the PPACA’s legal requirements. Under the PPACA, only plans that meet various requirements are “qualified health plans” (QHPs). Only QHPs may be sold on exchanges or satisfy the minimum coverage requirement (the individual mandate). More importantly, under Section 300gg-6 insurers are barred from offering health insurance plans in individual and small group markets that do not include the essential health benefits package. This obligation remains. Would it affect the enforceability of such an insurance policies terms in private legal dispute in state court? It’s understandable if insurance companies will be in no rush to find out.
So the fix is probably illegal, but challenging the President’s power to implement it may be problematic. Only someone who has been injured can bring it before the court, and failure to enforce may not leave anyone with standing. Mike Lee seems to think that this is the case. “If you are simply reducing legal burdens on people rather than curbing their behavior, it’s hard to prove an injury. It’s a dangerous precedent because it could give presidents a path to ignore laws they don’t like.”
I am not an attorney, so this is way over my head, but even I can see that Obama’s plan is unworkable. Insurance companies have 32 days to reprogram, and I do not see how that can be done. Even if they could do so, state insurance commissioners seem unwilling to approve the policies. An even bigger train wreck is on the horizon.
UPDATE: From the President’s hometown newspaper:
[I]n this country we don’t change bad laws by presidential fiat. We change them by having Congress rewrite them or by starting from scratch. Obama doesn’t want to reopen this law for fear that Republicans and some Democrats will substantially rewrite it. But that’s what has to happen.
What we don’t understand is their reluctance to give that failure more than lip service. Many of the Americans who heard their president say Thursday that “we fumbled the rollout of this health care law” would have been pleased to hear him add: So we’re admitting it. This law is a bust. We’re starting over.