Cities File Suit Against the Administration for Deliberately Failing to Enforce the ACA

On August 2, a coalition of cities filed a federal lawsuit against President Trump and high-ranking officials at the Department of Health and Human Services (HHS), alleging that the administration has “intentionally and unconstitutionally” sabotaged the Affordable Care Act (ACA). The plaintiffs—which include the cities of Baltimore, Chicago, Cincinnati, and Columbus, as well as two residents of Charlottesville, Virginia—argue that the Administration has taken numerous actions designed to undermine or dismantle the law, even though Congress has acted to keep the vast majority of the law intact. In doing so, the complaint alleges that the President has increased the cost of health coverage by discouraging enrollment, stoking uncertainty in the insurance markets, and reducing consumer choice. Rather than upholding the laws, which he swore to faithfully execute, the cities argue the President has failed to enforce the law in good faith.

Violations of the “Take Care Clause” of the Constitution

The Take Care Clause of the Constitution requires that the President “take care that the laws be faithfully executed.” The cities allege that the President and his Administration have violated this constitutional obligation by actively working to undermine the federal law in five key areas. First, they argue that the Administration has sought to decrease enrollment in ACA-compliant policies, by promoting non-ACA-compliant alternatives, including policies that do not cover individuals with preexisting conditions. The complaint points to the recent announcement by HHS that navigators applying for 2019 grant funding must demonstrate how they inform consumers of alternative coverage options, including association health plans and short-term limited duration insurance. There is concern that proliferation of such policies will expose consumers to financial liability and undermine the risk stability of the individual market. The cities argue “[n]avigators will now use funds that Congress designated to support the ACA for the opposite purpose—to undermine it.”

Second, the complaint points to the fact that the Administration has several times cut funding for outreach and enrollment efforts, which have proven to be effective means of promoting sign-ups. The Administration reduced navigator funding from $62.9 million in 2016 to $36.1 million in 2017, and to just $10 million in 2018. These reductions have come despite evidence that navigator assistance is the “strongest predictor” of enrollment. The Administration also cut $5 million in advertisements in the final days of the 2017 enrollment, leading to an investigation by HHS’ Office of Inspector General, which found that $1.1 million of the spending could not be recovered.

Third, the complaint points to the Administration’s use of government funding to run advertisements that openly criticize the ACA and propagate the narrative that the law is failing. For example, in June 2017, HHS posted 23 video testimonials from individuals who say they were “burdened” by the law, and has emphasized negative messages that plans are too expensive and the market is “imploding”

Fourth, they argue that shortening the open enrollment period harmed individuals and families by reducing the time available for them to find the right plan. For 2018, the Administration cut the open enrollment period in half – from 90 to 45 days, despite warnings that the cut would dampen enrollment. At the same time, the Administration stopped sending officials to promote local enrollment events, and reduced its social media support, leading health insurers to fill the void and ramp up outreach.

Finally, the complaint alleges that the Administration has made it more difficult for consumers to enroll by imposing unnecessary requirements. For instance, the complaint points to the Notice of Benefit and Payment Parameters for 2019 (NBPP), which, among other things, imposed new income verification requirements on consumers seeking advanced premium tax credits (APTCs). Many stakeholders previously commented that providing such documentation often poses a challenge for low-income consumers and can hinder their ability to complete applications.

In sum, the complaint argues that the Administration has not only “violated [its] constitutional obligation to take care,” but that it has gone a step further to “purposefully undermine” the law.

Violations of the Administrative Procedure Act

The Administrative Procedure Act states that a “reviewing court shall . . . hold unlawful and set aside agency action . . . found to be . . . arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” Citing the alleged violations of the Take Care Clause, the cities argue that the Administration, and HHS specifically, failed to adequately respond to stakeholder comments and concerns on the 2019 NBPP and has not provided sufficient rationales for the activities listed above. In particular, the complaint asks that the court hold as unlawful several provisions of the 2019 NBPP, including: depriving consumers of APTCs for failing to reconcile credits from prior years without a direct notification; discontinuing support for standardized plans; and permitting agents and brokers to select their own third-party auditors, among others.

Harm to Plaintiffs & Relief Requested

The cities claim they have experienced harm as a result of the Administration’s actions, which have driven insurers to leave the marketplaces, led to a decline in ACA enrollment and a corresponding increase in the number of uninsured, and overall, escalated the cost of coverage. The complaint argues that the Administration’s “sabotage efforts” will increase the number of uninsured residents, causing the cities to spend more on uncompensated care.

As means of relief, the cities requested that the court declare that the Administration has violated the Take Care Clause and Administrative Procedure Act, and that it be compelled to faithfully execute the ACA, by:

  • Expanding ACA enrollment and reducing marketplace premiums;
  • Promoting the availability of comprehensive plans by fully funding ACA advertising;
  • Ceasing advertisements that aim to undermine the law;
  • Fully funding navigators and preventing HHS from incentivizing the advertisement of non-compliant plans; and
  • Lengthening the open enrollment period, while participating in outreach and enrollment events, among other forms of relief.

Take Away: It is unclear whether the cities will be successful in their bid against the Administration. Legal scholars have noted that the lawsuit is fairly novel, because the Take Care Clause is not often used as a sword against presidents, who maintain discretion in their enforcement of laws. However, the cities do cite ample evidence that the Administration has actively sought to undermine the law and all indications suggest it will remain steadfast in its efforts to chip away at the ACA. Just last week, it finalized a rule allowing short-term health coverage to become a long-term alternative to individual market coverage, which many believe will worsen the risk pool. As stakeholders prepare for the 2019 open enrollment period, they should be mindful of federal attempts to depress enrollment and consider what state-based solutions are available to ensure access to adequate coverage for consumers.

3 thoughts on “Cities File Suit Against the Administration for Deliberately Failing to Enforce the ACA

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