The last days of Obamacare

The ACA clearly says subsidies will be paid only to those qualifying people obtaining health insurance coverage “through an exchange established by a state.”

The Roberts Court, 2010 official photo.
The Roberts Court, 2010 official photo.

WASHINGTON, March 3, 2015 — The Supreme Court is about to begin hearing arguments in King v Burwell. This crucial case will decide whether residents of states that have opted out of operating their own insurance exchanges are entitled to federal insurance subsidies. The court’s decision will come by late June, with the most likely outcome being the end of Obamacare.

Defenders of President Obama’s signature legislation hope that the court will rule that people buying insurance on the federal exchange are eligible for federal subsidies. This would allow the Affordable Care Act to remain in place even with the modifications the Obama Administration has made.

The law clearly says that subsidies will be paid only to those qualifying people who obtain their health insurance coverage “through an exchange established by a state.” The administration unilaterally modified the law to allow subsidies to all people who obtain insurance through the federal exchange. This was deemed necessary because 34 states did not set up state exchanges.

The plaintiffs argue that subsidies to residents of these states are not allowed by the law; the defendants argue that it was the intent of Congress, which passed the law, to allow subsidies to all people who qualified, regardless of the exchange used to purchase the insurance.

This interpretation runs counter to Obamacare architect Jon Gruber’s recorded comments. He noted that it was indeed the intent of the law to only pay subsidies to those on state exchanges. That requirement, he believed, would force all states to set up exchanges. He was wrong, as the majority of states opposed doing this. Yet  the original intent of the law, as he acknowledged, remains clear: The subsidy payments to those purchasing insurance on the federal exchange are illegal.

After the Supreme Court’s probable adverse decision on June 2015, ACA will collapse as those receiving subsidies from federal exchanges will either have to pay the full price for their policies or pay a fine of 2 percent of annual income. They will be unable to afford either. This is especially true considering the government-mandated requirements that, in combination, make the unsubsidized policies very expensive.

Because publicly available information is deliberately fuzzy, it is difficult to tell exactly how many people this will effect. But a consensus estimate is in the range of 6 to 7 million.

In addition, in those 34 states without a state exchange, the employer mandate would essentially be eliminated. The employers cannot choose to pay a fine and send the employees to the federal exchange, because the employees won’t be able to buy subsidized insurance. The law distrusts both businesses and workers alike.

So what will actually happen, and when?

Republicans say that they are crafting an alternative measure that removes government mandates, gives more freedom of choice to consumers and allows hundreds of millions of Americans to return to the doctor, the hospital, and the insurance plan that they prefer. This alternative offers tax credits rather than direct subsidies to lower income earners who wish to purchase health insurance. Tax credits offer the freedom to choose any health insurance plan, while subsides only apply to specific, government approved plans.

The problem is that even if Republicans can get a handful of Democrats to vote for their new proposals, President Obama has the power to veto such a measure. This leaves the country in a very difficult position if the Republican plan is not acceptable to him.

Under normal circumstances, Republicans and Democrats would sit down and discuss their differences. A compromise position would be found that could be supported by a majority in Congress. Because Obama pushed through the ACA on a completely partisan basis—nearly all Democrats voted for the law while every single Republican voted against it—there is a a now deep political divide that may be impossible to bridge.

The best solution would be a compromise bill that provides a pathway for all uninsured people who desire insurance to purchase at least basic coverage. It would also give freedom of choice to all insured Americans so that the doctor, the hospital and the insurance plan can be selected to fit their needs. Democrats want everyone covered, while Republicans want everyone to have freedom of choice.

Both sides should want the highest quality care available at the lowest possible price. Our leaders should stop the needless bickering and do what they are paid to do: lead and solve problems. If they get together with the idea that they will seek a solution instead of trying to sell a position, an acceptable health care law could result.


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