Sunday, February 13, 2011

Betsy's Page: Are waivers from Obamacare constitutional?

Betsy Newmark brings to the fore an interesting argument about the Obamacare waivers that are being handed out like Valentine's Day candy. Pointing to a an article by Columbia Law School professor Philip Hamburger,  Newmark notes that not very many people are questioning whether the waivers themselves are permissible.

Professor Hamburger writes:
More seriously, it raises questions about whether we live under a government of laws. Congress can pass statutes that apply to some businesses and not others, but once a law has passed — and therefore is binding — how can the executive branch relieve some Americans of their obligation to obey it? 
The dangers of inequity are obvious. Will only corporations and unions get waivers, or can individuals also get them? For example, if a family physician feels financial pressure under the health-care law to fire one of his employees, will he get a waiver to avoid adding to unemployment? 
Indeed, can even a small corporation get a waiver? Small businesses provide most new jobs, but the answer is obvious: Waivers are mostly, if not entirely, for politically significant businesses and unions that get the special attention of HHS or the White House. The rest of us must obey the laws. 

The dangers of inequity are real because of the discretion inherent in the waivers themselves.  Employers and unions can apply for the waiver (which in and of itself is an expensive proposition) and the Obama Administration through the department of Health and Human Services can then determine whether the waiver should be granted.  Jonathan Adler questions whether, as Prof. Hamburger asserts, the waivers themselves are unconstitutional?
An argument that any executive waiver authority is unconstitutional is a hard sell, particularly given the extent to which Congress may delegate legislative-like authority.   But the concerns that motivate such arguments, particularly that such power is prone to abuse and can undermine the rule of law, are serious.  What to do?  I think such concerns can be addressed through the creation of administrative procedures designed to ensure greater transparency, consistency, and accountability.
Adler brings up the best argument regarding the waivers themselves.  What is unclear is what are the criteria for the granting or denying a waiver?  As Adler pointed out, waivers are not uncommon in the executive branch, but what those waiver provisions include, for example with the Federal Communications Commission,  is a lengthy procedure, including notice and comment periods. Such provisions, Adler contends, allow for a clearer judicial review if that becomes necessary.  Such features are absent in the health care waiver process.

But returning to Betsy Newmark, there is a practical question,

There definitely seems to be something fishy about members of the executive branch to have the power to pick and choose whom a given law should apply to. Take the question away from Obamacare and imagine that it was some other law such as the Civil Rights Act and businesses argued that they could not afford to implement the law. Can you imagine the uproar if any presidential administration tried to pick out which organizations would get waivers from the law? Or pick any law that imposes some sort of burden on organizations - collecting payroll taxes, paying the minimum wage, or following environmental regulations? 

The greater problem with the healthcare waiver provisions is the lack of foresight exhibited by Congress.  They clearly recognized that there maybe problems, hence the waiver provision themselves.  Congress also stretched compliance out a fair distance, which seems admirable, but the confluence of the two means that a great many companies and unions, are failing to take an adequate effort at compliance rather than simply going for the waiver.  This is not an unreasonable position to take for the party seeking the waiver.  Getting the waiver now means they don't have to expend the efforts to comply first and then seek the waiver on the expedited basis.  So the economic rationale makes sense.

Congress is generally very bad at legislating for the future and makes serious mistakes when trying to legislate future behavior, particularly economic behavior.  So given their very poor track record, being a bit more deliberative would have gone a long way to preventing the problems we see today.

What doesn't make sense is that Congress allowed the waivers so far in advance (three and four years) before compliance was mandated.  What also seems odd is the criteria that Congress laid out to be considered for a waiver were particularly fuzzy.  Impact on unemployment seems particularly bad.  A businessman just needs to argue that changing the healthcare plan will lead to unemployment?  Given that there are so many factors lead to unemployment it seems difficult to understand.

Still, it is a good question to ask, is it proper for Congress to delegate the waiver activity?  Yes, I believe it is. Do I think it is unconstitutional to operate that waiver program without well-defined criteria issued by Congress?  Yes, because Congress is abdicating its responsibility?

To ask the question differently?  Would a Democratic Congress have delegated the waiver authority under ObamaCare to a Republican Presidency?

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