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Freedom Blue II: The ACA’s Unlikely Ally

By: Brady Bizarro, Esq.

A few months ago, if I had told you that a republican governor of a deeply conservative state was ignoring Obamacare and was shut down by the Trump Administration, you may have called me crazy. Yet, that is exactly what the Trump Administration did to the state of Idaho on March 8, 2018. To understand why, we need to understand the bigger picture and what was really at stake in this fight.

Recall that Idaho, like many states, is facing a crisis in its state exchanges. The combined effect of the individual mandate’s elimination and rising costs for residents who earn too much money to qualify for Affordable Care Act (“ACA”) subsidies has led many healthy people to drop out of the market, leaving the state exchanges in a crisis. In response, Governor Butch Otter issued an executive order back in January that permitted health insurers in his state to sell health plans on the individual exchange that did not comply with Affordable Care Act (“ACA”) rules. Essentially, the state’s Department of Insurance (“DOI”) would have permitted plans to charge individuals more based on a pre-existing medical condition (or to deny coverage in some cases) and to impose annual and lifetime limits on claims, among other things. Blue Cross of Idaho, the state’s largest insurer, announced that it planned to sell “Freedom Blue” plans based on the new state guidance at as much as fifty percent less than typical ACA plans.

On March 8th, the Centers for Medicare and Medicaid Services (“CMS”) warned Idaho that if it did not enforce Obamacare, the federal government would be forced to step in to do so. This reaction surprised more political experts than it did legal experts. After all, why would the Trump Administration come to the defense of Obamacare; a law which the president and his party have long decried? The answer is because much more was at stake than Obamacare; the rule of law itself was at stake.

A fundamental legal principle is that federal laws are the supreme law of the land. This is known as the Supremacy Clause of the U.S. Constitution. Another well-established legal principle is that the federal government cannot commandeer the states to force regulators to enforce federal law. Essentially, states have no obligation to enforce federal law; but if they fail to do so, the federal government must step in. That is, unless the federal government decides not to intervene. Think of the example of marijuana legalization under the Obama administration. In that case, the federal government decided that it was not worth spending millions of dollars to enforce certain federal drug laws (and it largely still maintains that position under the current administration). By contrast, in the case of “sanctuary cities,” the federal government has decided to step in and enforce immigration laws that some states and municipalities are not enforcing.

Despite the different approaches outlined above, many legal experts will tell you that it is dangerous to permit the executive branch to selectively enforce the law when it wants to. That may be why the Trump administration stepped in to block Idaho’s actions. It likely decided that it was not worth setting a precedent in this case, especially because there are still other alternatives that Idaho can pursue to alleviate the issues it is having with rising premiums. We will be following this situation to see how the state responds to this latest setback.




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