The Lawsuit to Restore the Cost-Sharing Payments
Yesterday, a group of 19 states asked a California district court to stop the Trump administration from cutting off the cost-sharing payments. To prevail, the states will have to convince the court that they face irreparable injury if the payments are terminated and that they’ve got a substantial likelihood of eventually winning their lawsuit.
To my mind, the states have a good case on irreparable injury. But their merits case is weaker. In their motion, the states make three arguments: (1) first, that the money to make the cost-sharing payments has been appropriated and that the Trump administration must therefore adhere to statutes and rules requiring payment; (2) that abruptly terminating the payments is arbitrary and capricious within the meaning of the Administrative Procedure Act; and (3) that President Trump has violated his constitutional duty to take care that the laws are faithfully executed.
There’s lots to say about each of these claims. But let me cut to the chase. I think the states can prevail on the second and third arguments only if they can win on the first—and they can’t, in my judgment, win on the first.
On the APA claim, I’m sympathetic to the states’ argument that the administration’s stated reason for cutting off the payments—that the money hasn’t been appropriated—is pretext. If the stated reason isn’t its real reason, that’s probably enough to make out an APA violation.
But what’s the remedy for that violation? Unless there’s an appropriation, the court can’t order the resumption of the payments: that would be tantamount to ordering the Trump administration to break the law. Any arbitrariness would be harmless because it wouldn’t change the bottom line that the payments are unlawful. The viability of the APA claim thus rises and falls on whether there is, in fact, an appropriation.
So too for the take care claim. Refusing to pay money that hasn’t been appropriated shows fealty to the law, not the reverse. So unless there’s an appropriation, cutting off the payments can’t violate President Trump’s duty to faithfully execute the laws. That’s true even if President Trump has acted in bad faith. He might be abiding by the law for bad reasons, but he’d still be abiding by the law.
The linchpin to the states’ case, then, is the claim that Congress has in fact appropriated money for the cost-sharing payments. Here, the states are pressing the same argument that the Obama administration previously made and that the district court rejected in House v. Burwell. As I’ve explained before, however, the Obama administration’s argument has never held water. If I’m right about that, the states don’t have a case.
About the best that can be said for the states’ motion is that appropriations law is hard (true) and that cutting off the payments will inflict serious harm (also true). Maintaining the status quo to allow the district court to better understand the case holds some appeal.
But I still think the district court is unlikely to order restoration of the payments. As the judge said yesterday, “I understand that it’s a big deal to order the federal government to spend $600 million.” That’s especially so where both the president and Congress agree that the money hasn’t been appropriated. And even if the court does rule in the states’ favor, the federal government would take an immediate appeal from an adverse judgment. I have a hard time seeing how any injunction withstands Ninth Circuit and Supreme Court review.
I wish and hope that I’m wrong about this. Lord knows that I’d like to see the payments continue, and it’s reckless and wasteful for the Trump administration to cut them off on the eve of open enrollment. Remember, insurers will almost certainly be able to recover every nickel of cost-sharing money that they’re owed by suing in the Court of Federal Claims. Not making the payments serves no other purpose than to introduce chaos into the insurance markets.
But the law is what it is. To prevail, the states have to show that Congress has appropriated the cost-sharing payments. I’m skeptical that they can make that showing.