Baseline Enforcement Discretion: The Affordable Care Act Waivers

In my last two posts, I’m going to apply my framework to some contemporary examples.

Because I’m focusing on matters of current interest, these examples all come from the Obama Administration. As I indicated at the outset, however, aggressive use of non-enforcement to set policy is not unique to this administration. Recent Republican administrations have done it too (often less transparently).

As I also indicated earlier, I think there are structural reasons for increasing reliance on non-enforcement to make policy. The practical inevitability of broad discretion in contexts like criminal justice may make such an unbounded conception of enforcement discretion seem familiar and unexceptionable, and it may therefore be hard to resist resorting to it as a policy tool in the face of a hostile or inertial Congress that won’t readily take action to address practical problems with existing laws.

Yet broad exercises of discretion, if unchecked, give rise to a worrisome negative feedback loop: Discretionary non-enforcement frees Congress from accountability for the scope of the laws it enacts, which encourages enactment of further overbroad laws, which in turn give even greater practical discretion to the executive branch.

What’s more, executive practices in one administration set precedents that may be used to quite different policy purposes in future administrations. For instance, a future president might well be less committed to the Affordable Care Act than President Obama is. The interests of those who (like me) would like to see the Act succeed in the long run might well have been better served if the administration had established a stronger norm of literal compliance with the law’s terms than it has done (as I’ll explain shortly).

So how should we think about enforcement discretion and the executive branch’s duty to execute the law?

I think this question breaks down into two inquiries. First, what is the baseline level of executive discretion under the constitutional scheme? And second, how should executive officials understand their role in areas like criminal law — areas where a gross mismatch between the scope of prohibitions and the resources provided for enforcement makes substantial under-enforcement inevitable?

I’ll address the first question here and then turn to the second in my next (and final) post.

As I’ve already explained, I think the Constitution dictates a norm of limited executive discretion as a baseline rule. Absent legislative delegation of broader discretion, executive officials should presume discretion to decline enforcement in particular cases for case-specific reasons, but they should not presume authority to suspend enforcement either prospectively or for broad categories of legal violations for reasons of policy.

The Affordable Care Act provides some useful illustrations here. The administration has announced policies temporarily suspending enforcement of at least two provisions of the law: the requirement that employers above a certain size provide health coverage to employees or else pay a penalty; and the requirement that individual health plans with plan years starting after January 1, 2014 meet certain minimum coverage requirements.

(Just yesterday the department announced a third policy of also allowing certain individuals who’ve been dropped from existing insurance plans to forego buying insurance without paying a statutory penalty for doing so. This policy, however, appears to be based on an interpretation of a “hardship” provision in the statute, so it’s not a non-enforcement policy.)

In my judgment, in both these policies, the administration is presuming more discretion than the statute should be understood to give it. In this notice and this testimony, the IRS justified its one-year suspension of the employer mandate as a form of “transition relief” to give the agency more time to develop regulations regarding what information employers will need to report to enable the agency to police their compliance with the law.

But even if completing these regulations on time was impossible and the agency couldn’t realistically enforce the employer penalties without the reports, it seems to me it would have been more consistent with the executive’s responsibility to execute the law to require employers to take their chances in not complying.

It’s true that agencies often claim authority to grant “transition relief” from new statutory provisions, so it might be argued that Congress has implicitly ratified this practice. The administration in fact cited some prior IRS examples as support for the policy.

At least outside of situations where implementation is truly impracticable, this practice strikes me as dubious. Given the important separation of powers values at stake, it should take more to rebut the presumption against categorical suspensions of enforcement. But even granting this theory, the relief provided in this case seems to me to go beyond the IRS precedents invoked as support, so even implicit ratification may be lacking.

As for the suspension of insurance plan requirements, the administration to my knowledge has not provided any terribly clear legal explanation of this policy, so it’s possible I’m missing something. Again, though, it seems to me there’s little reason to read the statute as conferring this degree of discretion.

Under the administration’s policy, as described in this letter to state insurance commissioners, insurers may continue coverage under existing non-compliant plans with plan years starting before October 1, 2014, even though the statute says plans must comply if they’re renewed after January 1, 2014. As the letter implicitly recognizes, however, the statute gives state officials primary responsibility for enforcing the insurance requirements, so this policy can take effect only insofar as state regulators also choose to forego enforcement for ten months. (Some have said they will do so while others have not.)

Yet the statute also gives an enforcement role to the Secretary of HHS. The statute requires the Secretary to enforce the law’s requirements through civil penalties if the Secretary determines “that a State has failed to substantially enforce a provision (or provisions) in [the ACA] with respect to health insurance issuers in the State.” Far from implying broad enforcement discretion, this belt-and-suspenders enforcement architecture seems designed to ensure compliance. It requires the Secretary to step in as a backstop if states fail to execute the law.

Both these examples, then, reflect too loose an approach to enforcement of statutory provisions. This approach to statutory enforcement improperly shifts policymaking authority and accountability away from Congress, where it belongs, and onto the executive branch, which should properly exercise such authority only with a more explicit statutory delegation.