Government & Politics

ObamaCare's Built-in Road Hazard

Supreme Court will consider whether the law means what it says about subsidies.

Nov. 11, 2014

ObamaCare is headed back to the Supreme Court, and some court watchers are hoping this case could be the deathblow to the falsely named Affordable Care Act. The case is King v. Burwell, and at issue is whether the federal government has the right to offer subsidies to purchase health insurance through the federal exchange.

The original letter of the ObamaCare law states in plain English that health insurance subsidies would be available only to people who purchase coverage through state-run exchanges. To put it generously, this was meant as a carrot to encourage states to create their own exchanges. When 36 states opted out of becoming cogs of federal machinery, instead relying on the feds to set up the exchange in their states, the IRS stepped in and declared subsidies would apply to all exchanges, including the federal one.

It’s easy to see why the Obama administration enacted this arbitrary reinterpretation of a clearly worded statute. Without taxpayer-supported subsidies, many individuals and families would not be able to afford to purchase this so-called affordable insurance. The employer mandate would also no longer carry weight in those 36 states. The exchanges would collapse and ObamaCare’s house of cards with it. But that’s no excuse for the IRS or any other agency to just make up new rules without congressional input. And that’s why King v. Burwell is headed to the Supreme Court.

Hard as it is to believe, the Fourth Circuit Court of Appeals ruled in favor of the administration’s lawlessness. The administration lost a similar case, Halbig v. Burwell, before a three-judge panel of the U.S. Court of Appeals for the DC Circuit, though the full court later decided to rehear it en banc. That makes the Supreme Court’s decision to take the case especially surprising because there is technically no circuit court split.

Writing for National Review Online, former Bush administration Justice Department official John Yoo expressed optimism that the High Court will rule correctly. Yoo points out, “If the Court agreed with the lower courts, or wasn’t sure about it, they could have just allowed the issue to further percolate.” Furthermore, he wrote, “The grant of certiorari (which only takes four Justices) only makes sense if a majority wants to overrule the lower courts quickly.”

Playing the guessing game of what the Supreme Court will do in any given case isn’t for the faint of heart. Many people thought ObamaCare would be struck down two years ago, only to discover that Chief Justice John Roberts had practically rewritten the law to keep it alive.

If, in their majority wisdom, the Supremes do strike down the taxpayer-funded subsidy, all sorts of things could happen.

For starters, millions of Americans will lose their subsidies, making insurance far more expensive. Many will wind up uninsured. Beyond that, the employer mandate in 36 states would essentially become null and void. The currently delayed mandate requires employers with 50 or more employees to cover insurance should one of those employees purchase insurance with subsidies. No subsidies means no trigger for the employer mandate. Left in that situation, businesses would flock to the 36 states without exchanges to avoid being subject to the mandate, likely leading to the downfall of the mandate as a whole.

The individual mandate would also lose its teeth. One of the exemptions from being compelled to purchase insurance is if there are no affordable options available. Without subsidies, more Americans become exempt from the mandate. Insurance markets would be affected because the compulsory pool of purchasers would dry up.

On the flip side of all this is the fact that if the subsidy rule is struck down there may be intensified pressure for states to set up exchanges – particularly those run by Republican governors who have so far been able to stand against the expansion of ObamaCare while still receiving taxpayer support from Washington in the form of benefits for their citizens.

Still, a Supreme Court rejection of the IRS’s expansion of subsidies will likely stir the repeal debate. Now that Republicans control both chambers of Congress, they have the opportunity to dive deeply into extensive rewrites of the law, or push harder for outright repeal. They may find support among Democrats for some of these things, as ObamaCare was one of the many reasons they suffered such a drubbing at the polls last week. Indeed, as we predicted, it became a lightning rod.

Now, it’s all up to the Supreme Court to, in a paraphrase of Nancy Pelosi, find out what’s actually in the law.

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