Government Fails to Show Subsidies Included in Original Design

In a Freedom of Information Act case currently in court, CMS (Centers for Medicare & Medicaid Services) has thus far failed to produce any records showing that the calculation and display of subsidies were any part of the original Obamacare federal exchange design.

The case (Civil Action No. 15-0510) was filed in U.S. District Court for the District of Columbia in April. Plaintiff’s recent motion for an expedited hearing was opposed by the Obama Justice Department and is currently stalled before an Obama appointee, Judge Ketanji Brown Jackson.

The FOIA request as originally filed asked for software specifications setting forth all functionality of the website. Suit was filed after the government failed to respond to the request within the statutory time. Plaintiff then narrowed the request in a settlement agreement with the government to “records setting forth specifications for a subsidy calculator in the original RFP for ‘Subsidy calculator’ means functionality for actually calculating enrollee tax credits under the Affordable Care Act. ‘RFP’ means the Request for Proposal, Request for Quotation, or equivalent record (however captioned).”

Plaintiff made clear to government counsel and later to the court that plaintiff’s interest in the records has to do with the King v. Burwell case currently pending in the Supreme Court. The Court is expected to decide by the end of June whether the text of the Obamacare law permits subsidies to flow through the federal exchange. Thus, it has been made clear to government counsel and to the court that the settlement was time-sensitive and it was in the government’s interest to produce such records if it could.

Instead, the plaintiff received 535 pages resulting from the original FOIA request which, coincidentally, had been completed during settlement talks. Plaintiff also received a promise from the government that it would produce the results of a new search based on the settlement language.

The 535 pages all related to the Data Services Hub, the support system for all state and federal exchanges, not to the website or customer interface. A Data Services Hub Statement of Work (Version 1.0 dated September 30, 2011) did briefly reference Advanced Premium Tax Credits (APTCs) a handful of times, but all of the references were consistent with the Data Services Hub supporting state exchanges or facilitating financial transactions with insurers. Nothing in the Statement of Work described subsidy functionality as a part of the federal exchange, or proved that the government contemplated the flow of subsidies through from the outset.

Thus, the 535 pages were a misdirection not germane to plaintiff’s request or expressly stated interest. As of this writing, plaintiff has not received any other records in response to the settlement agreement. Government counsel, after indicating that the new search might take 10 days or so, claimed at the end of that time that the search could take additional weeks. Therefore, plaintiff filed a motion for an expedited hearing, further narrowing the case to 19 records specifically cited in the Data Services Hub Statement of Work, documents that are potentially responsive to plaintiff’s settlement language (e.g., “Eligibility and Enrollment – Exchange Business Architecture Supplement”).Plaintiff asked the court to set a hearing date forthwith and order the government to bring all 19 records to the hearing.

Plaintiff also invited the government to produce any records showing subsidies were included in the original design of the federal exchange website.

No additional records have been produced as of this writing. Instead, the Obama Justice Department opposed plaintiff’s motion for an expedited hearing and requested the court to order the parties to submit a briefing and production schedule as late as July 1st, conveniently after the Supreme Court is expected to rule in the King case. As of this writing, the court has not ruled on plaintiff’s request for expedited handling.

The bottom line is that the Obama administration, aided by the Obama Justice Department and an Obama court appointee, has stonewalled plaintiff’s now very narrow request. Plaintiff threw down the gauntlet and dared the administration to demonstrate that the flow of subsidies through the federal exchange was contemplated from the start in the very first design document, not added later in contravention of the plain text of the Obamacare law when the administration saw how few states were actually willing to establish their own exchange. While the absence of subsidy functionality in the first design of the federal exchange would not necessarily determine the outcome of King v. Burwell, such absence would be highly suggestive of the correct result.

[Editor’s Note - Competitive Enterprise Institute earlier filed a similar case (Civil Action No. 14-2138) in U.S. District Court for the District of Columbia based on a broader request. That case now involves 12,000 potentially responsive records on a production schedule running out through October.]






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