Featured, Health Care, Original Report

Emails, documents generate questions about legality of recent health plan ruling

As President Obama has made changes to the Affordable Care Act (ACA – also commonly known as ObamaCare), Republicans and right-of-center outlets have often denounced those actions as illegal. For example, conservative columnist Charles Krauthammer called many of the delays in implementing ObamaCare “completely lawless.” The Wall Street Journal said, Obama has a “penchant for treating laws as unlimited grants of power to his Administration…”

And yet, the same controversy over the legality of healthcare rulemaking* has boiled beneath the surface here in Colorado, but with far less volume.  Multiple emails, documents, press releases and bulletins all plainly suggest it was illegal for the Colorado Division of Insurance (DOI) to allow the sale of health care policies which do not meet all of the “essential requirements” of ObamaCare — a decision the DOI gave a green light to in May.

According to internal emails from late March, DOI Commissioner Marguerite Salazar was certain the state would be breaking the law if it allowed the sale of some older health insurance plans which didn’t meet all of the ACA requirements. 

icon_orig_reportThe March 26 email summarized a meeting between a few of the highest officials and stakeholders involved with the implementation of the ACA in Colorado. Michelle Patarino, a consultant with “Collaborative Health Solutions,” created a post-meeting summary, which included a bullet point: “No specific timeframe was given, but Commissioner Salazar made it clear that allowing sale of non-ACA [compliant] plans would require legislative action,” (all quotes placed in bold are emphasis added by the author).

However, a mere five weeks later on May 2, Commissioner Salazar announced the state would indeed allow the sale of non-ACA compliant plans, even though no legislative “fix” had been or would be passed.

By the time the administration announced they would allow the non-ACA compliant plans to be sold, officials were saying a piece of legislation from 2013 – House Bill 1266 – was sufficient to allow Commissioner Salazar to execute the policy through rulemaking, and not by legislation.  HB 13-1266 was intended to align state health care laws with federal health care laws.  But as you will see, the Division of Insurance did a 180 degree turn on their interpretation on the bill.

In an April 1 meeting of the state’s health exchange, strong and assured language was used about the need for legislation.  Archived minutes from “Connect for Health Colorado,” note the following: “Gretchen (Hammer) clarified for the board that this was also part of the alignment bill [HB 13-1266] last year. It [HB 13-1266] stated there would no longer be the sale of non-ACA compliant plans, so if the state chooses this option, legislation would need to be run.”

Also from that board meeting, the health exchange voted to send a letter to Governor Hickenlooper and Commissioner Salazar which said, in part, “We recognize the state is considering several possible actions on this issue, including the passage of legislation within the remainder of this year’s session, to allow for the continuation of non-ACA compliant plans.”

Although the last two examples presented rely on the words of Connect for Health Colorado, the DOI’s own words are equally as compromising, if not more so.  A release from DOI in 2013 explicitly stated that HB 13-1266 disallowed the sale of non-ACA compliant plans.  “All health insurance plans sold or renewed after December 31, 2013, must meet the requirements of the ACA, as required by state legislation passed in 2013 (House Bill 13- 1266).”

And for a final piece of evidence, a December regulatory bulletin from DOI plainly states, “Current state law does not allow for the renewal of non-grandfathered, non-ACA-compliant plans into 2015.”  Then it becomes a wonder how, without legislative action, there could appear an article in the Denver Post titled, “Colorado extends health plans not meeting ACA standards through 2015.”

Salazar’s confidence in the need for legislation on this matter was also a long-held one.

In a special report for the Denver Post, reporter Art Kane noted Salazar’s belief that a legislative fix was needed went back at least as far as November of 2013. 

State Rep. Amy Stephens (R-Monument), who helped sponsor the bill that created Colorado’s state exchange, pulled no punches in her assessment of DOI’s actions. “HB [13]-1266 is very clear. It is the law in Colorado and does not offer ‘cover’ for the Commissioner or Governor to break the law. They broke the law, because like our lawless President – “they think they can” – and this is about trying to save the seats of a Democrat US Senator (Mark Udall) and the Governor (John Hickenlooper).”


All of the emails referenced in this report were obtained via a request filed under the Colorado Open Records Act. The request asked for documents which would “estimate, forecast, approximate, or otherwise intend to judge the impact” of a decision to allow non-ACA compliant plans to be sold.

Forty-nine emails were withheld by DOI, most of them withheld for the “deliberative process” privilege. Interestingly, several emails withheld which met the qualifier of forecasting the impact of the ACA decision had subject lines of, “Senate GOP report on cancellations.”

(Also of note at the federal level, bipartisan talk has emerged in recent weeks to do away with the deliberative process privilege in Freedom of Information Act (FOIA) requests.  This article by Politico says the deliberative process privilege has “been ridiculed by transparency advocates as the “withhold it because you want to” exception to FOIA.”)

Other emails, whose subject lines and dates were disclosed but contents withheld, indicate the decision to allow non-ACA compliant plans was made by April 9 at the latest. Commissioner Salazar had a significant legal change of heart within two weeks.

CompleteColorado.com asked the DOI to waive the deliberative process privilege, thereby making the emails public, an action the DOI has taken in the past. This time, however, the DOI refused.

Additionally, the DOI refused to answer any of our questions regarding this information.

Specifically we asked:

1.     Why was Commissioner Salazar convinced in the first place that legislation would be necessary?

2.     Who changed her mind? When? With what reasoning?

3.     In a story by Art Kane in the Denver Post, Kane writes: “Brown said consumers who urged the state to extend noncompliant policies dealt with staff and were at public hearings, which is why none of the e-mails obtained by The Post reflected that point of view.” If the persuasion to allow non-ACA compliant plans came from town halls, why is there no single email in the disclosed emails that uses that word or phrase? Or no email that discusses what a swaying influence they were? And why was public input not as crucial in November of 2013?

4.     Who is Michelle Patarino, and what is her role in ACA implementation?

5.     Does DOI have any estimation whatsoever of the number of people who will take advantage of this rule change? Or in another way, does DOI have any estimation of the fewer number of people estimated that will not enroll in the health exchange?

A DOI official acknowledged receipt of our questions but did not return our email.


Was Salazar’s rule legal? All of the evidence presented above suggests that it may not have been.  But it’s still difficult to guess when so many emails which might shed light on her evolving thought process have been withheld due to the “deliberative process” privilege. However, even more documents, such as this calendar piece, show a conference scheduled for “Insurance Renewal Legislation” – “legislation” of course being the key word, suggesting rulemaking was not the preferred option (or perhaps was not even considered an option) at that point.

Eugene Kontorovich, professor of law at Northwestern University specifically addressed the Obamacare delays – and the quandaries they posed for state insurance commissioners – in an article for Politico:

The Constitution’s Supremacy Clause makes federal law—not presidential policies— binding on the states. So what’s a state insurance commissioner to do? Federal law requires health plans to have a mandatory level of “minimum coverage.” Thus it is not clear how a state insurance commissioner can authorize a plan that violates federal law. Such action would create a direct conflict between state action and federal law—and the latter automatically wins (even without the broad view of preemption of state laws that the administration has championed in immigration cases).

Naturally, it’s not hard to find an opinion counter to Kontorovich’s. Simon Lazarus, Senior Counsel at the Constitutional Accountability Center argues:

“…applicable judicial precedent places such timing adjustments well within the Executive Branch’s lawful discretion. To be sure, the federal Administrative Procedure Act authorizes federal courts to compel agencies to initiate statutorily required actions that have been “unreasonably delayed.” But courts have found delays to be unreasonable only in rare cases where […] inaction had lasted for several years, and the recalcitrant agency could offer neither a persuasive excuse nor a credible end to its dithering.”


Reports on President Obama’s decision in early March contained open speculation that the temporary waiver – which ultimately set the stage for Salazar’s action – had strong political motivations. As CNBC noted. 

The extension could give political relief to Democrats, particularly in vulnerable legislative districts, who face criticism about the effects of Obamacare on their constituents. It also effectively delays until after the 2016 presidential election the requirement that nearly all Americans have health insurance that complies with ACA minimum standards. Most people who do not have health insurance by this year face a tax penalty in 2015 equal to up to 1 percent of their adjusted gross income.

Politics entered the calculus on the Republican side of the field as well. U.S. Rep. Cory Gardner, also a candidate for U.S. Senate, tried to claim credit for the change by Salazar. Gardner’s office sent a letter to Governor Hickenlooper’s office days before DOI announced the rule change. When the official word went out, Gardner’s office issued a press release titled, “Gardner’s Request Granted, Coloradans Able to Keep Health Plans.”

*The word “rulemaking” is used in this article in the informal, colloquial sense, generally to mean when a government agency gives interpretive or regulatory guidance regarding a statute that has already passed.  For the record, in Colorado government, the formal term rulemaking refers to the creation of or amending of regulatory guidance that undergoes a strict procedure, including the following four stages: “Notice of Proposed Rule, Comment Period on Proposed Rule, Hearing on Proposed Rule and Final Adoption of Proposed Rule.” The decision to allow non-ACA compliant plans to be sold was carried out via bulletin, not by the formal rulemaking process.


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