• What can Trump do on day one to the Affordable Care Act?

    When it comes to the ACA, the first major question facing an incoming President Trump will be whether to terminate cost-sharing payments to health plans. Already, prominent voices are calling on him to immediately cut off payments. What effect would that have? And what are his options?

    Under the ACA, health plans are required to cut their low-income customers a break on their out-of-pocket payments. The government is then supposed to reimburse the health plans directly. Wiping out the cost-sharing payments would deal a body blow to health plans. Some might go under; many more would try to exit the market.

    Whether health plans will be allowed to exit is another question. To enter the market, insurers had to get approval from their state’s insurance commissioners. And state insurance commissioners typically ask for certain guarantees from health plans as a condition for approval. A plan might promise, for example, not to abandon its customers midyear. Those guarantees may themselves be conditional: a serious deterioration in an insurer’s financial situation, for example, might enable them to exit.

    Right now, I don’t think anyone knows which states would and wouldn’t allow health plans to exit. (If anyone does, please tell me!) Charles Gaba has reported that health plans have reserved the right to leave the federal exchanges if they lose the cost-sharing reductions. But leaving the exchanges and leaving the market are two different things.

    Let’s assume, though, that some substantial number of states will allow health plans to pull out of the market if the cost-sharing payments cease. In those states, the collapse of the individual market could occur very quickly. Millions of people would be pitched off their insurance, leaving them with no other options.

    To avoid that result, there will be pressure on Trump to maintain the cost-sharing payments for a transition period. But he’ll also get pressure to terminate them immediately. Indeed, the fiercest opponents of the ACA will likely argue that he has a legal obligation to do so.

    Here’s why. In House v. Burwell, the Obama administration and the House of Representatives are wrangling over whether Congress has appropriated the money to make cost-sharing payments. A district court in D.C. said that it hasn’t, and I think that’s right. More importantly, I’m sure that President Trump’s lawyers think that’s right.

    If the administration means to throw in the towel in House v. Burwell, then on what authority can the Trump administration keep making the cost-sharing payments? Without an appropriation, it’s unconstitutional to pay money from the U.S. Treasury. Not only is it unconstitutional, it’s a crime under the Anti-Deficiency Act. Stopping the payments is arguably the only constitutionally available course of action.

    But I wonder if it’s that simple. A variant of this problem arises when the Supreme Court determines that a sitting administration is acting unconstitutionally or contrary to law. When that happens, the typical result is to prohibit the administration from doing what it shouldn’t be doing.

    In rare cases, however, the Supreme Court has entered a stay of its judgment to afford the administration a grace period to avoid disruption and to allow Congress to respond. In Northern Pipeline Construction v. Marathon Pipeline and Buckley v. Valeo, for example, the Court found constitutional flaws in the bankruptcy and election systems, respectively. And in both cases, the Court entered a stay—even though that allowed unconstitutional conduct to continue. These cases help explain why, in King v. Burwell, Justice Alito toyed with the idea of staying any decision that would curtail ACA tax credits.

    Here, the Supreme Court isn’t on the scene. What we have instead is a change in position across administrations. Nonetheless, the question for President Trump is the same as the question that the Supreme Court has confronted in the past: does a constitutional violation have to be cured immediately, or is there constitutional latitude to cushion the blow? The Court’s practice arguably suggests the latter.

    It’s thus possible to hold the view that the cost-sharing payments are unlawful and to say that the proper remedy isn’t their immediate elimination. To put it colloquially, unscrambling an egg implicates a different set of concerns than whether to scramble it in the first place.

    If that’s right, President Trump may be able to keep making cost-sharing payments until Congress can devise a repeal-and-replace plan, assuming that happens relatively quickly. I don’t pretend for a moment that the question is free from doubt—these are deep constitutional waters—but it seems to me that there’s a plausible argument for remedial flexibility. Whether President Trump will use that flexibility is another question altogether.

    @nicholas_bagley

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