Monday, May 16, 2016

Will the Power of the Purse Unravel the Affordable Care Act?

Court Finds Insurer Reimbursement Lacks Required Appropriation

The Affordable Care Act (ACA) -- commonly known as Obamacare -- has been controversial from the start. Chief among my criticisms were the claims by its proponents that Congress, acting pursuant to its Commerce Clause power, could order individuals to purchase private insurance; that the penalty for failing to do so was not a tax but rather a penalty; and that the federal exchanges for certain states were really state exchanges. After two trips to the Supreme Court that resulted in opinions by the Chief Justice largely upholding the ACA through creative rewriting -- or what I like to call legalistic legerdemain -- most supporters thought the ACA was safe.  

That all changed last Thursday when U.S. District Court Judge Rosemary Collyer issued a decision holding that payments from the U.S. Treasury to private insurers under the ACA must be appropriated by Congress. I have thought from the start that people would be surprised to learn (like I did) that private insurers are receiving billions of dollars in transfers from the Treasury to subsidize lower insurance costs for eligible individuals. These insurer payments are designed to reimburse deductibles, coinsurance, copayments, and similar charges. According to the complaint in this case, such payments were estimated to exceed $3 billion in 2014 and total approximately $175 billion over the ten succeeding years. These payments confirm my view that the ACA is a backdoor government funded health plan; then again, transparency has never been part of the effort used either to pass the ACA or defend it in court. 

The appropriation issue is a very simple one. Under the Constitution, only Congress can authorize the federal government to spend money. This is known as the "power of the purse." Article I, Section 9, states the rule quite clearly: "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law . . .." The meaning of these words is not controversial. As the Supreme Court stated in a 1937 decision, this clause "was intended as a restriction upon the disbursing authority of the Executive department . . .. It means simply that no money can be paid out of the Treasury unless it has been appropriated by an act of Congress." In an 1850 decision, the Supreme Court used words that are right on point for the ACA:
No officer, however high, not even the President, much less a Secretary of the Treasury or Treasurer, is empowered to pay debts of the United States generally, when presented to them. . . . The difficulty in the way is the want of any appropriation by Congress to pay this claim. It is a well-known constitutional provision, that no money can be taken or drawn from the Treasury except under an appropriation by Congress. . . . However much money may be in the Treasury at any one time, not a dollar of it can be used in the payment of any thing not thus previously sanctioned. Any other course would give to the fiscal officers a most dangerous discretion.
At its core, Judge Collyer's ruling is thus quite straightforward:  While Congress passed the ACA, which authorized insurer reimbursement, Congress has not appropriated the money to actually reimburse them. The Administration initially requested an appropriation for these insurer payments, but since one was not forthcoming, the Administration shifted course and decided that the payments were not required to be appropriated because the benefits are permanent. The Judge's words concerning this approach are instructive:
To recapitulate, the consequence at issue here is that a permanently authorized benefit program was made dependent on non-permanent appropriations. That approach is perfectly consonant with principles of appropriations law; most federal entities operate in the same fashion. The Secretaries’ argument, taken to its logical conclusion, is that every permanent authorization must also constitute a permanent appropriation or else an “absurd result” would obtain. That is assuredly not the law. Higher premiums, more federal debt, and decreased enrollment are not consequences of the ACA’s text or structure. Those results would flow—if at all—from Congress’s continuing refusal to appropriate funds for Section 1402 reimbursements. That is Congress’s prerogative; the Court cannot override it by rewriting 31 U.S.C. § 1324(b). 
Why does this matter? The Constitution, which was designed with checks and balances among the branches of government, directs and compels this division of responsibility precisely to maintain balance and avoid concentrating power in the Executive. Congress alone has the power of the purse. If the Executive had the power to spend money as he alone sees fit, there would be no balance. As James Madison stated in The Federalist 58, 
[t]he House of Representatives cannot only refuse, but they alone can propose the supplies requisite for the support of government. They, in a word, hold the purse—that powerful instrument by which we behold, in the history of the British Constitution, an infant and humble representation of the people gradually enlarging the sphere of its activity and importance, and finally reducing, as far as it seems to have wished, all the overgrown prerogatives of the other branches of the government. This power over the purse may, in fact, be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure.
Supreme Court Justice Joseph Story summarized the importance of having the power of the purse and appropriations reside in the legislative branch in his 1833 treatise, Commentaries on the Constitution of the United States.
The object is apparent upon the slightest examination. It is to secure regularity, punctuality, and fidelity, in the disbursement of the public money. As all the taxes raised from the people, as well as the revenues arising from other sources, are to be applied to the discharge of the expenses, and debts, and other engagements of the government, it is highly proper, that congress should possess the power to decide, how and when any money should be applied for these purposes. If it were otherwise, the executive would possess an unbounded power over the public purse of the nation; and might apply all its monied resources at his pleasure. The power to control, and direct the appropriations, constitutes a most useful and salutary check upon profusion and extravagance, as well as upon corrupt influence and public peculation. In arbitrary governments the prince levies what money he pleases from his subjects, disposes of it, as he thinks proper, and is beyond responsibility or reproof. It is wise to interpose, in a republic, every restraint, by which the public treasure, the common fund of all, should be applied with unshrinking honesty to such objects, as legitimately belong to the common defence, and the general welfare. Congress is made the guardian of this treasure . . .. 
The Administration initially tried to dismiss this case on procedural grounds by arguing that the House of Representatives, which brought the suit in 2014, lacked standing to sue because this was a political dispute between two branches of government. Judge Collyer rejected that argument last September, ruling that the House had standing to bring suit "to preserve its power of the purse and to maintain constitutional equilibrium between the Executive and the Legislature." Frankly, this is exactly the type of issue that must be addressed by a court because it is a fundamental separation of powers dispute. Under our system, Congress appropriates and the Executive then can spend. But the President cannot spend that which is not appropriated -- even if there is money sitting in the federal government's coffers. 

So where does this leave the ACA? Surely ailing to say the least -- and maybe worse. In her ruling, Judge Collyer enjoined the use of unappropriated monies to fund the insurer payments due under the ACA, but she stayed the injunction pending appeal. I expect a fast appeal by the Administration, and this case ultimately could end up back at the Supreme Court.

The decision can be accessed by clicking here.


Thursday, May 12, 2016

The Conversational Lawyer is Now on Twitter

Some subjects require less words, so keep an eye out for my tweets on different topics.

Follow me @TheConvLawyer -- You can use the link on the right side of the blog.

Sunday, May 1, 2016

The Natural Born Citizen Requirement, Part 2: Is Senator Cruz Eligible To Be President?

As discussed in my first post on this issue, which addressed the importance of the Article II qualifications and can be found here, only a "natural born citizen" is eligible to be President. Senator Cruz was born in Canada to a mother who was a U.S. citizen and a father who was a Cuban citizen; he thus is a citizen, but not a natural born citizen as that term would have been understood and used by the Framers. From any interpretive approach, and certainly from the originalism approach Senator Cruz favors, I believe that the text, history, and legal scholarship support the conclusion that the phrase natural born citizen was intended to mean someone born on U.S. soil, or native born. (There may be exceptions for children born abroad to American diplomats or those in military service, but neither is relevant to Senator Cruz.)

As an initial matter in understanding the specific text, the phrase natural born citizen must mean something important and more than citizen because it appears only once in the Constitution -- while the word citizen or citizens is used 21 times. Words are presumed to have meaning in any legal document, and this is certainly true when it comes to the Constitution. As further support for the proposition that the phrase is significant and means a very specific type of citizen, consider this: those who were not natural born but were citizens at the time the Constitution was adopted were exempted from this requirement and eligible to be President. There was a brief time in our history when a citizen who was not natural born was qualified to be President, but those days are long gone.  

And so we turn to the next question: What did the Framers think it meant? The Framers were quite concerned about foreign influence, and in embarking on their grand experiment in republican self-government they were looking to distance the new United States as much as possible from the monarchies and politics of Europe. There was no doubt concern that Europe might seek to drag the new nation back into its sphere, perhaps by seeking to gain the highest political office. Indeed, John Jay, the first Chief Justice of the Supreme Court and one of the three authors of The Federalist Papers, suggested the phrase to George Washington in a letter during the Constitutional Convention. His goal was to ensure that a foreigner could not be commander in chief, one of the President's main functions. 

It was not a controversial addition, for James Madison’s Notes of the Convention indicate that the inclusion of the natural born qualification was accepted without debate. This lack of debate also confirms that there was no disagreement about what the phrase meant to the Framers, for surely there would have been debate had there not been a shared understanding. So what was the shared understanding? Legal history strongly supports the conclusion that it was understood to mean that the President must be native born on American soil. Sir William Blackstone, writing in his famous Commentaries on the Laws of England -- which were widely known to American lawyers, including the Framers -- devotes several pages of his treatise to the issue of citizenship. His statements about England's approach are instructive and most likely informed the thinking of the Framers. Wrote Blackstone, “[t]he first and most obvious division of the people is into aliens and natural-born subjects. Natural-born subjects are such as are born within the dominions of the crown of England.. . .” This, to me, is what the phrase natural born refers to -- someone physically born here. Some have argued that the Framers would not have followed Blackstone and English common law, but that argument is entirely unpersuasive and solely designed to avoid the consequences of English common law, which essentially formed the basis for American common law. Blackstone was widely used by American lawyers at the time and for long after. Indeed, his work was a prime source by which Abraham Lincoln trained himself to be a lawyer.

Leading American legal writers of the time were firmly of the view that only those born on U.S. soil could be President. For example, St. George Tucker, a prominent and well known law professor at William & Mary, published his own version of Blackstone’s Commentaries in 1803 with annotations of American law. His writings were highly influential. As he described it, "[t]hat provision in the constitution which requires that the president shall be a native-born citizen (unless he were a citizen of the United States when the constitution was adopted,) is a happy means of security against foreign influence.. . ." He made clear the view that a naturalized citizen would be entitled to all the rights of natural born citizens, except that “they are forever incapable of being chosen to the office of president of the United States.” 

Joseph Story, a famous Supreme Court Justice and Professor of Law at Harvard, wrote about the driving force behind the President being natural born in his 1833 treatise, Commentaries on the Constitution of the United States:

It is indispensable, too, that the president should be a natural born citizen of the United States; or a citizen at the adoption of the constitution, and for fourteen years before his election. This permission of a naturalized citizen to become president is an exception from the great fundamental policy of all governments, to exclude foreign influence from their executive councils and duties. It was doubtless introduced (for it has now become by lapse of time merely nominal, and will soon become wholly extinct) out of respect to those distinguished revolutionary patriots, who were born in a foreign land, and yet had entitled themselves to high honours in their adopted country.. . . But the general propriety of the exclusion of foreigners, in common cases, will scarcely be doubted by any sound statesman. It cuts off all chances for ambitious foreigners, who might otherwise be intriguing for the office; and interposes a barrier against those corrupt interferences of foreign governments in executive elections, which have inflicted the most serious evils upon the elective monarchies of Europe. 
The lengths to which some have gone to try and press their own point on this topic can only be characterized as legalistic legerdemain. I noted above the disingenuous effort to ignore Blackstone. Another good example is a completely misplaced reliance on a law from 1790 that was repealed a few years later. In an effort to support the claim that Senator Cruz is natural born, much has been made of the Naturalization Act of 1790, which states that "the children of citizens of the United States that may be born beyond Sea, or out of the limits of the United States, shall be considered as natural born Citizens.. . .  This law, however, was repealed only a few years after it was enacted, and it provides no such support. Most importantly, it is not the law by which Senator Cruz became a citizen; indeed, the Naturalization Act of 1795 that replaced it removed the natural born language entirely:  "the children of citizens of the United States, born out of the limits and jurisdiction of the United States, shall be considered as citizens of the United States" -- not natural born citizens.  

To recap: only natural born citizens are eligible to be President, and that means being born here. As Senator Cruz says, facts are stubborn things. And they cannot change. The reality is that Senator Cruz was not born here, the law under which he became a citizen cannot and did not make him a natural born citizen, and he simply is ineligible to be President. 

As I stated in Part 1, this is an important issue that needs to be addressed. Let me be very clear that I do not for a moment have a philosophical quarrel with the proposition, advanced a few years back regarding the then foreign born governors of California and Michigan, that the Constitution should be amended to remove the natural born qualification. Maybe it should. But I do quarrel with those who ignore the constitutionally mandated qualification or engage in selective parsing of the historical record to try and obfuscate the issue.

To paraphrase the words of the late Justice Scalia, the rule of law is a law of rules. That concept should remind us that the Constitution and its rules must be followed.