Last Thursday, the President announced a change in Administration policy designed to ensure that those who like their health insurance plans will be able to keep them for at least one more year, despite the legal requirements of the PPACA and its implementing regulations. On Friday, I explained the President lacks the authority to waive the Act’s requirements, or even to set aside duly promulgated regulations, and could not make noncompliant health insurance plans legal under the PPACA. All the President can do is to declare that the federal government will not enforce the PPACA’s requirements against insurers for renewing noncompliant plans. The President’s announcement does not bind state insurance commissioners, however, nor does it overcome the legal jeopardy health insurers could face should they agree to renew such plans and enforce any terms that have been declared illegal under the PPACA.
The University of Michigan’s Nicholas Bagley is certainly more sympathetic to the PPACA than am I, but he is no more convinced of the legality of the President’s purported “fix.” In a post on The Incidental Economist, he explains why he doubts whether the President’s assertion of enforcement discretion “works.”
The administration’s claim rests on an expansive reading of Heckler v. Chaney, an important Supreme Court decision from 1985. In Heckler, the Court held that agencies have wide discretion to decide whether, when, and how to enforce the law. No agency, the Court explained, has enough resources to police every technical legal violation. Instead, agencies must set priorities based on a host of factors—the harm caused by the violation, the likelihood of prevailing, the need to conserve scarce resources, and the like. Courts shouldn’t second-guess how an agency weighs all those factors. Enforcement, in the legal jargon, is “committed to agency discretion by law.”
But just how far does the Heckler principle go? Although federal agencies have wide discretion to decline to prosecute, they can’t dispense with the law altogether. That would contravene the President’s constitutional duty to “take Care that the Laws be faithfully executed.” The difficulty is that there’s no crisp dividing line between non-enforcement of the law (which is OK) and ignoring the law (which is not). In principle, you could spin the like it/keep it fix either way. It’s both a decision not to enforce the law against a discrete set of plans and a decision to dispense with the law as to those plans.
As Bagley notes, there are several reasons to doubt whether Heckler supports the Administration’s “fix.” For starters, primary enforcement of the various insurance regulations is left to state insurance commissions, who are under no obligation to follow the Administration’s lead. Further, unlike in Heckler, the Administration cannot claim that it is merely engaged in making a “discretionary judgment concerning the allocation of enforcement resources.” As a consequence, Bagley notes, this “fix” entails a more aggressive assertion of the executive’s enforcement discretion authority than did the Administration’s controversial immigration policy announced last year. Further, the latest fix does not represent the sort of targeted, “single-shot” decision at issue in Heckler, insofar as it is intended to have a broad effect.
Bagley also suggests the Administration has a problem insofar as it is seeking to use its enforcement discretion to, in effect, “deliberately rewrite the statute,” insofar as it is now seeking to expand the PPACA’s grandfathering provisions. It’s actually worse than that. The grandfather provision of the PPACA is not particularly clear as to what plans are covered. Specifically, it fails to indicate when, and under what circumstances, year-to-year plan revisions cause an insurance plan to lose its grandfathered status. That’s a gap that HHS filled through regulations — regulations that interpreted the scope of the clause quite narrowly, forcing insurers to cancel a large number of plans. If the Administration (like Senate Democrats) is now having second thoughts about the way it chose to implement the PPACA in this regard, it should rescind or revise the rule, rather than seek the same result under the guise of exercising enforcement discretion.
Another problem with the President’s latest “fix” is that it does more than pull back enforcement of the law’s requirements. It also seeks to impose new obligations on private insurers. Specifically the new policy conditions the exercise of enforcement discretion on private insurers agreeing to a series of disclosures to those who might wish to renew their policies for an additional year. Specifically, as detailed in this guidance letter, insurers wishing to renew their policies must provide their customers with a notice explaining that the relevant policies fail to comply with the PPACA’s requirements, that other more comprehensive policies are available, and how such policies may be obtained. Whether or not requiring such disclosure is a good idea, I am aware of no provision in the law that authorizes such a requirement and, more importantly, I do not see how the Administration can impose such a requirement through an exercise of its enforcement discretion outlined in a press conference and a guidance letter. Put another way, if the Administration wishes to impose such an obligation on insurers, it could conduct a rulemaking and promulgate regulations. What it cannot do is simply announce that it will forbear enforcing the law provided that regulated entities “voluntarily” agree to a new, unauthorized set of regulatory requirements.