Court Holds Obamacare's Fate In Its Hands
July 28, 2016 at 4:25 p.m.
By Gary [email protected]
It is anybody’s guess as to how that’s going to play out.
At issue is a tiny passage in the 1,200-page law. The law offers tax credits for “ ... plans offered in the individual market within a State which cover the taxpayer, the taxpayer's spouse, or any dependent ... of the taxpayer and which were enrolled in through an Exchange established by the State under 1311 [1] of the Patient Protection and Affordable Care Act.”
The emphasis is mine because those five little words are the crux of the issue.
The plaintiffs say the law doesn’t allow the Internal Revenue Service to extend tax-credit subsidies to coverage purchased through exchanges established by the federal government – only through exchanges established by the states.
They argue when the IRS offered up tax credits for plans operating on federally run exchanges, it exceeded the authority granted under the ACA.
If the Supremes buy the plaintiffs’ argument, it would mean millions of people would lose their Obamacare subsidies. Their premiums would skyrocket and they likely would discontinue coverage.
Close to follow would be the insurance rate death spiral. The number of uninsured would jump dramatically, with only the sickest people keeping insurance. This in turn pushes premiums higher and more people out of the insurance market.
Proponents of Obamacare claim that it was just a simple case of mistaken language. Of course, the law’s authors wanted the credits to apply to plans offered on federally run exchanges, they say.
But I’m not sure that’s true.
I don’t think the law’s authors ever envisioned there being a need for federally run exchanges. Originally, the law mandated that states either form an exchange or expand Medicaid to accommodate the uninsured.
That pretty much gave everybody who was uninsured the opportunity to get insurance that was subsidized by the federal government.
You either got a tax credit for buying insurance on an exchange set up by your state or you went on Medicaid. (Actually, there was a third option. Don’t buy insurance and pay a fine to the IRS.)
But, basically, it was “A” or “B” – insurance on an exchange or Medicaid.
But along comes the Supreme Court ruling in National Federation of Independent Business v. Sebelius.
There, the court upheld the constitutionality of requiring that all Americans have health insurance coverage – the “individual mandate.” But at the same time, seven justices declared the mandatory Medicaid expansion unconstitutional. Then five justices threaded a legal needle. They got around eliminating Medicaid expansion from the bill by coming up with a convoluted way for states to choose whether they would expand Medicaid. It was unconstitutional to federally force Medicaid expansion on the states, but states could expand Medicaid if they wanted to.
The court added a “C, none of the above” to our “A” and “B” options of insurance. A bunch of states refused to expand Medicaid and that’s when the notion of federal exchanges popped up.
It’s hard for me to believe the law’s authors could have foreseen this. If they thought the Supreme Court was going to strike it down, they never would have proposed a Medicaid expansion in the first place.
I think the law’s authors figured they had all the bases covered and never envisioned a “none of the above” curveball from the Supreme Court.
So, yeah, I think they probably did mean for the IRS to only subsidize plans offered by state-run exchanges, simply because they never envisioned it any other way.
All of this has a lot more to do with politics that it does with health care anyway, and there is plenty of blame to go around.
Congress could easily fix the problem by passing an amendment to the law that says the tax credits are available under any exchange. But that won’t happen because Republicans in the majority in Congress would never do that.
And let’s be honest here. The law was poorly written in the first place, largely because it was rushed through by Democrats who had Obama in the White House and majorities in both houses of Congress.
The legislation passed without a single Republican vote. Remember then-House speaker Nancy Pelosi infamously saying we had to pass it to see what’s in it?
Not a really positive kickoff for a massive piece of legislation that affects one-sixth of the U.S. economy.
How will the Supremes rule?
I have no idea.
I think intellectually, the law clearly states that the tax credits can only be applied to people who buy insurance through exchanges “established by the states.”
So the court may just side with the plaintiffs.
I think emotionally, it would be difficult to toss millions of Americans back onto the rolls of the uninsured and upend the entire health insurance system in America.
So the court may just side with the government.
Whatever the court decides, one thing is clear. It rarely ends well when you pass crappy laws.[[In-content Ad]]
It is anybody’s guess as to how that’s going to play out.
At issue is a tiny passage in the 1,200-page law. The law offers tax credits for “ ... plans offered in the individual market within a State which cover the taxpayer, the taxpayer's spouse, or any dependent ... of the taxpayer and which were enrolled in through an Exchange established by the State under 1311 [1] of the Patient Protection and Affordable Care Act.”
The emphasis is mine because those five little words are the crux of the issue.
The plaintiffs say the law doesn’t allow the Internal Revenue Service to extend tax-credit subsidies to coverage purchased through exchanges established by the federal government – only through exchanges established by the states.
They argue when the IRS offered up tax credits for plans operating on federally run exchanges, it exceeded the authority granted under the ACA.
If the Supremes buy the plaintiffs’ argument, it would mean millions of people would lose their Obamacare subsidies. Their premiums would skyrocket and they likely would discontinue coverage.
Close to follow would be the insurance rate death spiral. The number of uninsured would jump dramatically, with only the sickest people keeping insurance. This in turn pushes premiums higher and more people out of the insurance market.
Proponents of Obamacare claim that it was just a simple case of mistaken language. Of course, the law’s authors wanted the credits to apply to plans offered on federally run exchanges, they say.
But I’m not sure that’s true.
I don’t think the law’s authors ever envisioned there being a need for federally run exchanges. Originally, the law mandated that states either form an exchange or expand Medicaid to accommodate the uninsured.
That pretty much gave everybody who was uninsured the opportunity to get insurance that was subsidized by the federal government.
You either got a tax credit for buying insurance on an exchange set up by your state or you went on Medicaid. (Actually, there was a third option. Don’t buy insurance and pay a fine to the IRS.)
But, basically, it was “A” or “B” – insurance on an exchange or Medicaid.
But along comes the Supreme Court ruling in National Federation of Independent Business v. Sebelius.
There, the court upheld the constitutionality of requiring that all Americans have health insurance coverage – the “individual mandate.” But at the same time, seven justices declared the mandatory Medicaid expansion unconstitutional. Then five justices threaded a legal needle. They got around eliminating Medicaid expansion from the bill by coming up with a convoluted way for states to choose whether they would expand Medicaid. It was unconstitutional to federally force Medicaid expansion on the states, but states could expand Medicaid if they wanted to.
The court added a “C, none of the above” to our “A” and “B” options of insurance. A bunch of states refused to expand Medicaid and that’s when the notion of federal exchanges popped up.
It’s hard for me to believe the law’s authors could have foreseen this. If they thought the Supreme Court was going to strike it down, they never would have proposed a Medicaid expansion in the first place.
I think the law’s authors figured they had all the bases covered and never envisioned a “none of the above” curveball from the Supreme Court.
So, yeah, I think they probably did mean for the IRS to only subsidize plans offered by state-run exchanges, simply because they never envisioned it any other way.
All of this has a lot more to do with politics that it does with health care anyway, and there is plenty of blame to go around.
Congress could easily fix the problem by passing an amendment to the law that says the tax credits are available under any exchange. But that won’t happen because Republicans in the majority in Congress would never do that.
And let’s be honest here. The law was poorly written in the first place, largely because it was rushed through by Democrats who had Obama in the White House and majorities in both houses of Congress.
The legislation passed without a single Republican vote. Remember then-House speaker Nancy Pelosi infamously saying we had to pass it to see what’s in it?
Not a really positive kickoff for a massive piece of legislation that affects one-sixth of the U.S. economy.
How will the Supremes rule?
I have no idea.
I think intellectually, the law clearly states that the tax credits can only be applied to people who buy insurance through exchanges “established by the states.”
So the court may just side with the plaintiffs.
I think emotionally, it would be difficult to toss millions of Americans back onto the rolls of the uninsured and upend the entire health insurance system in America.
So the court may just side with the government.
Whatever the court decides, one thing is clear. It rarely ends well when you pass crappy laws.[[In-content Ad]]
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