The Republican House and Senate have begun the process of repealing the Affordable Care Act (ACA) through the budget reconciliation process. Enacting a budget reconciliation bill is likely to take weeks, however, and at this point it seems likely that such a bill will delay repeal of some of the most important provisions of the ACA for much longer.
In a meeting with Republican lawmakers on January 4, 2017, Vice-President-elect Mike Pence stated that the Trump administration may move much more quickly against the ACA through executive action. He told reporters that the Trump administration would begin on the first day of the administration an orderly transition process to unwind the ACA: "We’re working now on a series of executive orders that will enable that orderly transition to take place even as Congress appropriately debates alternatives to and replacements for Obamacare.”
The President and the executive departments and agencies clearly do have a great deal of power. They can exercise their authority through issuing executive orders, rules, and guidance. The executive branch of government operates programs, decides whether and how to defend or settle litigation, and exercises discretion in enforcing the law. But within our constitutional system the president and executive departments and agencies must comply with the laws and operate according to the processes laid down by law.
What can the executive do to “unwind” a law without congressional action and within the law?
The ACA Was Implemented Primarily Through Regulation And Guidance, Not Executive Orders
Vice-President-elect Pence referred explicitly to “executive orders.” There is a long tradition of American presidents issuing executive orders, although they are not specifically authorized by the Constitution or a statute. Executive orders are generally directed at government agencies and only indirectly affect individuals. When issued pursuant to a statute or the Constitution they are legally binding. An executive order cannot, however, repeal or amend a statute and is not authoritative if it is contrary to law.
President Obama issued only one executive order under the ACA, which prohibited the use of the ACA’s premium tax credits and cost-sharing reduction payments or community health center funding to pay for abortions except in cases of rape, incest, or life endangerment. President-elect Trump could perhaps direct the agencies that implement and enforce the ACA to minimize regulatory or reporting burdens, but he could not legally repeal the ACA or any of its requirements through executive order.
The ACA has been implemented primarily through regulations promulgated by the U.S. Departments of Health and Human Services (HHS), Treasury, Labor, and other agencies over the past six years. Regulations are promulgated under the Administrative Procedures Act, which sets out clearly the rulemaking procedures. Ordinarily an agency must publish a proposed rule for public comment, consider the comments it receives, and publish a final rule, responding to the comments. Agencies must publish specific analyses with a rule considering, for example, the paperwork burdens the rule imposes and its effect on federalism and small businesses. Significant regulations must be reviewed by the Office of Management and Budget at both the proposed and final stage. Agencies are permitted to promulgate rules without first receiving public comment, but only when “good cause,” is shown, which for important rules would normally mean an emergency exists requiring immediate action.
New administrations have authority to pull regulations that are not yet published as final and to delay for a short period of time regulations that are final but not yet effective. Once a regulation is effective, however, it can only be amended or revoked through a new round of notice and comment rulemaking, in which an explanation must be offered as to why the change or revocation is necessary. Major regulations promulgated within 60 legislative days of the end of Congress may also be subject to review by Congress under the Congressional Review Act, but virtually no ACA regulations (other than those affecting Medicare payment) have been finalized during this time period.
Much of the ACA was implemented through guidance. The detailed substantive requirements that state 1332 innovation waiver proposals must meet for approval by HHS and the Internal Revenue Service were, for example, promulgated through guidance. HHS and other agencies have issued hundreds of frequently asked questions interpreting regulatory requirements, and it is likely that the Trump administration will as well. Guidance can be published without notice and comment, but must be consistent with legal and regulatory requirements. It cannot be used to amend rules or statutes.
Executive departments and agencies operate programs pursuant to statutes, regulations, and guidance. The Centers for Medicare and Medicaid Services of HHS, for example, operates HealthCare.gov, the federal marketplace, while the IRS administers the ACA’s premium tax credit and individual and employer responsibility programs. The administration could reduce resources to the agencies that operate ACA programs, undermining their administration of these programs. It could also cease enforcing or reduce enforcement of certain ACA requirements, like the individual or employer mandates, although such actions might be subject to legal challenge. The Trump administration will also have to make programmatic decisions with respect to state Medicaid or 1332 waiver applications.
The Trump Administration’s Response To ACA-Related Litigation Will Be Crucial
The Trump administration will also have to decide how to respond to a number of lawsuits challenging ACA requirements. Most immediately, it will have to decide whether to continue the Obama administration’s appeal of an adverse decision from the lower court in House v. Burwell; the decision (stayed during appeal) blocked reimbursement to insurers for the cost-sharing reductions they must offer low-income marketplace enrollees, citing the lack of a specific congressional appropriation. Dropping this appeal could have immediate and disastrous consequences not just for low-income Americans but for the entire individual insurance markets.
The Trump administration will also have to decide how to respond to dozens of cases brought by religious organizations claiming exemptions from the requirement that they cover contraceptives for their employees or students, and cases challenging the regulatory requirement prohibiting insurers from categorically rejecting coverage for gender transition services. Decisions the administration makes respecting litigation may result in significant changes in ACA requirements.
Finally, it cannot be assumed that the new administration will limit its actions to those permitted by law. The Obama administration has been sued dozens of times by those who claim that actions it took to implement the ACA did not meet legal requirements, and in a few instances courts have agreed. (See, for example, the Hobby Lobby case.) In its zeal to dismantle the ACA, the Trump administration may be tempted to violate either requirements of the ACA or the procedural guardrails that constrain executive action. Those harmed by these actions will turn to the courts for protection, creating a whole new round of ACA litigation.
Editor’s note: This post is being cross-posted at the Health Affairs Blog.