Could Mitt Romney Repeal Obamacare by Waiver?

Presidential candidate Mitt Romney has repeatedly stated during the presidential debates that he would “direct the Secretary [of Health and Human Services] … to grant a waiver from Obamacare to all 50 states” once elected. Walking back a bit from the statement in a post on the National Review blog and in an editorial in USA Today, Romney said that his executive order would “pav[e] the way” for Obamacare waivers, directing federal officials “to return the maximum possible authority to the states” and mentioning that such an order would be “the first step” in his health care plans.

Could Mitt Romney repeal Obamacare on day one with a waiver to all 50 states? Some of Mitt’s supporters have claimed that he can, pointing to the more than 1,000 waivers granted by the Obama administration since the law has passed. As noted by Washington Monthly blogger Rick Ungar, however, the waivers received by states, companies, and labor unions during the Obama administration are temporary waivers, which cannot extend beyond 2014. These temporary waivers are meant to help states get in compliance with the law gradually and prevent excessive rises in health insurance premiums. None of the waivers have applied to the most controversial component of Obama’s health care proposal, the individual mandate, which won’t become law until 2014 anyway.

The Patient Protection and Affordable Care Act (ACA) does include more extensive waivers of the act’s requirements (including the individual mandate), called “waivers for state innovation,” but the Secretary of Health and Human Services’ ability to grant those waivers is more clearly defined by the statute. The legal requirements for “state innovation” waivers are set out in Section 1332 of the ACA. A number of the requirements make a categorical waiver for all 50 states seem highly dubious:

  • The statute requires states to apply for waivers, but goes even further than that, stipulating a number of requirements for state applications for waivers, including a “comprehensive description of the state legislation and program to implement a plan meeting the requirements for waiver,” a “10-year budget plan that is budget neutral for the Federal Government,” and extensive public notice-and-comment procedures before an application can even be submitted;
  • The law states the Secretary of Health and Human Services may grant a waiver request “only if the Secretary determines” that the state plan will:
    1. provide coverage that is “at least as comprehensive” as the coverage in the ACA;
    2. provide coverage and cost sharing protections against “excessive out-of-pocket spending” that are at least as affordable as the coverage in the ACA;
    3. provide coverage to a “comparable number” of its residents as the provisions of the ACA; and
    4. not increase the federal deficit.
  • The Secretary of Health and Human Services is required to monitor and evaluate state programs and report to Congress on them, to ensure that the requirements of the waiver process are being met;
  • States may only apply for “state innovation waivers” starting on or after January 1, 2017, making it even less likely that President Romney would be able to issue such waivers at least until a hypothetical second term;
  • The statute mandates that waivers expire after five years, so even a successful Romney waiver action would be unlikely to survive long after he was out of office.

It’s pretty easy to conclude, based on these provisions, that granting waivers to all 50 states on “day one” of a Romney presidency would be illegal. But the Obama administration, for its part, isn’t setting up a great precedent for such a contingency:

With a growing number of states rebelling against the No Child Left Behind law and stalled efforts in Congress to reform it, the Obama administration says it will grant waivers to liberate states from a law that it considers dysfunctional.

Representative John Kline (R-MN), chairman of the House Education and Workforce Committee, recently asked the Congressional Research Service about the legal authority for such waivers. The CRS responded with a memorandum outlining the legal issues involved with the Secretary of Education’s waiver authority under No Child Left Behind. Finding the Secretary’s authority to grant waivers under the language of the statute “very broad,” the memo finds that the Department of Education “appears to have the authority” to waive most of the provisions at issue in the Obama administration’s education proposals.

Could Romney’s waivers survive a legal challenge, or does the Secretary of Health and Human Services have similarly broad authority? Supporters of the Affordable Care Act can take some comfort in the stringent language of the statute, including its requirements that states provide health care coverage “at least as comprehensive” as that provided by the Act and that states must cover “at least a comparable number” of their residents as the Act would. Some of the legal analysis in the CRS memo may be instructive on this point:

The starting point in interpreting a statute is the language of the statute itself. The Supreme Court often recites the “plain meaning rule,” that, if the language of the statute is plain and unambiguous, it must be applied according to its terms. See, e.g., Barnhart v. Sigmon Coal Co., 534 U.S. 438, 450 (2002)

If Romney’s Secretary of Health and Human Services granted waivers in a way that contradicted the “plain meaning” of the Affordable Care Act, as interpreted by the courts, it would likely be struck down. This would seem to be the case where, as Romney seems to propose, waivers would be granted to states that do not apply for waivers or states that do not even attempt to create a plan for covering their residents as specified in Section 1332.

The CRS memorandum also notes that “reviewing courts have cited the Administrative Procedure Act (APA) as affording judicial authority to invalidate waivers” that are found to be “arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law.” While courts give deference to federal agencies in determining whether an agency’s action was arbitrary and capricious, the CRS points to a case where the 9th Circuit Court of Appeals struck down a statutory waiver granted by the Secretary of Health and Human Services under Section 1115 of the Social Security Act. Section 1115 allows states to apply for waivers from the statutory requirements of welfare programs to implement pilot programs that further their stated goals.

In 1992, California proposed a “work incentive” reform to its state welfare system, a precursor to the welfare reforms that would later become law throughout the United States, and applied for a waiver under Section 1115 from requirements of the Aid to Families with Dependent Children (AFDC) program. The Secretary of Health and Human Services granted the waiver, and a group of residents receiving benefits under the AFDC program challenged it. The 9th Circuit found the grant of the waiver “arbitrary and capricious” in violation of the APA, in that

the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. (quoting Motor Vehicle Mfr. Ass’n. v. State Farm Ins., 463 U.S. 29, 44 (1983))

In particular, the court found that the Secretary of Health and Human Services did not take into consideration evidence submitted by representatives of residents receiving benefits of the plan’s danger to those residents. If a Romney Secretary of Health and Human Services were to fail to consider evidence mounted against a waiver, or violate other requirements imposed by courts under the APA, it would likely face a challenge on such grounds. Issuing waivers “on day one” of a Romney presidency would almost surely “rel[y] on factors which Congress has not intended it to consider,” even if review under the APA tends to be deferential (evidenced by the paucity of cases cited in the CRS report where waiver decisions were invalidated).

That said, the greatest barrier to a challenge to waiver decisions may not be the legal merits, but whether or not any plaintiffs in opposition to such a waiver have standing to sue. In the California welfare case, the individuals who faced benefit cuts after the California waiver clearly met the requirements that plaintiffs show (1) an “injury-in-fact” and (2) “causation” of the injury. The only question about standing in that case was whether a victory for the plaintiffs, sending the waiver decision back to the Secretary of Health and Human Services to consider the evidence presented by the plaintiffs, would fulfill the third prong of standing, “redressability.” But a waiver from the provisions of the Affordable Care Act (or for that matter, the No Child Left Behind Act) would not have as clear an injured party as a welfare recipient facing a loss of benefits. Who, then, would have standing to challenge Romney waivers?