The SCOTUS decision on Obamacare nears

My favorite blog on the conflicting appelate court decisions from a year ago focused on this issue:

http://blog.willis.com/2014/07/analysis-what-next-after-the-conflicting-obamacare-decisions/

Not much has changed, but I would disagree with some items in that blog.

To quote the “architect” of the Massachusetts Connector and frequent contractor with the federal government in their efforts to design and implement the Patient Protection and Affordable Care Act of 2010, professor Jonathan Gruber confirmed, on January 10, 2012 that:
“… Through a political compromise … states should play a critical role in running these health insurance exchanges…. A number of states have expressed no interest in doing so (setting up the exchange). … I am enough of a believer in democracy to think that when the voters in states see that by not setting up an exchange the politicians of the state are costing them hundreds, and millions and billions of dollars. … That is the ultimate threat. … If your government doesn’t set up an exchange, you are losing hundreds of millions of dollars of tax credits to be delivered to your citizens.”

Later, in response to a question at that session, professor Gruber stated:

“… In the law, it says if the states don’t provide them, the federal backstop will. The federal government has been sort of slow in putting out its backstop, I think partly because they want to sort of squeeze the states to do it. I think what’s important to remember politically about this, is if you’re a state and you don’t set up an Exchange, that means your citizens don’t get their tax credits. But your citizens still pay the taxes that support this bill. So you’re essentially saying to your citizens, you’re going to pay all the taxes to help all the other states in the country. I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it. …”
See: http://obamacarefacts.com/2014/11/11/jonathan-gruber-obamacare/

Now, keep in mind that almost 90% of public exchange participants receive taxpayer subsidies.

A second place where I disagree with the blog is that it suggests that the states can simply adopt the federal exchange as their state based exchange – to restart the flow of taxpayer subsidies. Well, maybe. However, if the Supreme Court does rule in favor of the challengers based on a literal reading of the statute, note that the same section of the statute confirms that “… Each State shall, not later than January 1, 2014, establish an American Health Benefit Exchange … and, the State shall ensure that such Exchange is self-sustaining beginning on January 1, 2015.” So, if the court stops the subsidies for federal exchanges, it ain’t clear that a state can adopt an exchange after January 1, 2015. Compare that language with the Medicaid expansion language where there is no deadline for state action to qualify. Just as important, under HHS’s current rules, state-based exchanges must secure conditional approval by June 15, 2015 or so to operate in 2016. No state using a federal exchange can meet that deadline. HHS could adjust its rules, but even if it does, open enrollment is set to begin on November 1. States will thus have a scant four months to get new exchanges up and running. In most if not all states, that won’t be nearly enough time.

Sure, the IRS might tempt litigation again, and approve late adoptions for taxpayer subsidies; but, who wants to rely on the IRS to directly challenge a specific Supreme Court ruling?

Finally, I suppose that if the Court rules against the Obama administration, they could stay their decision until Congress has time to take action. But, not likely. So, compliance is probably due within 25 days. At that point, the IRS will no longer have the authority to cut subsidy checks—called “advance payment tax credits”—to insurers in 34 states. When residents in those states go on HealthCare.gov to pay their monthly premiums, perhaps as early as August 1st , they’ll be asked to pay the full cost of their coverage. Most won’t. You then get to the 30 day “grace period” – so, expect coverage to end for 6+MM Americans no later than September 1st. It is not clear that the insurers will extend coverage through the grace period itself.

With respect to the statutory language, I can only note that the statute has many conflicting provisions with regard to the public exchanges. PPACA proponents argue that Congress never intended to create a massive incentive for states to adopt exchanges. They ask, why would Congress want the states to step up here? Perhaps it is because that’s where insurance is regulated today, and, the obvious structure of PPACA (versus single payor, public option, etc.) was to try to build on existing structures. Compare that to the Medicaid provisions, where Congress clearly intended to force states to adopt the Medicaid expansion by threatening their existing, pre-health reform Medicaid funding. The Supreme Court struck that down in June 2012 – three years ago.

Whenever we have a major bill, we invariably have a ton of legislative history to guide us in how we ended up where we did. The provisions in question were adopted late on Christmas Eve 2009, where no one had read the bill. And, even so, where there are conflicts in the statute or where the statute’s terms do not reflect legislative intent (drafting errors), we almost always see a technical corrections bill. No agreement on any technical corrections here.

I say, show me the legislative history. Confirm for me that Professor Gruber, who was there in 2009 and 2010, was lying when he repeatedly confirmed that only state based exchanges would qualify for taxpayer subsidies. Problem, there is no such legislative history.

LikeLike

Dick, you write, ” …maybe the SCOTUS will take the reasonable position that “the state” means the broader definition of any government. ”

The law has the word “State” capitalized. The architects of the law admitted early on that the intention of the law was that the word State meant “a State”, such as California, Iowa, etc. The architects did not believe States would opt out of creating their own exchanges. (I believe 37 States have done that. )

It is not up to SCOTUS to tailor a law to someone’s liking. The law was clear as was the intention of the drafters. SCOTUS can either interpret the law as written, or make something up. Naturally, they can follow William O. Douglas’ lead in Griswold, and do just that.

LikeLike