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Absurdity at the heart of the latest Obamacare challenge

The determined opponents of the Affordable Care Act lost their legal fight on the merits three years ago when the Supreme Court ruled that one of its central provisions — the requirement that most individuals buy health insurance or pay a penalty — was constitutional. Now they're trying to kill it on a technicality — whether four words in a section describing the calculation of tax credits for those eligible for health insurance subsidies should be read in such a way as to render the entire 900-page statute unworkable.

Arguments before the Supreme Court today in the case, King v. Burwell, focused on whether the phrase in question, "established by the state," was, as the plaintiffs argue, part of a grand but unspoken Congressional plan to encourage states to set up their own health insurance exchanges rather than let the federal government do it for them. The government's case was stronger, and probing questions by the justices underscored how non-sensical and even potentially unconstitutional the statute would be if the plaintiffs' interpretation held.

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Reading tea leaves from Supreme Court justices' questioning is always a risky business, but after today's arguments, it appeared that the four more liberal justices were solidly on the side of the Obama administration. Chief Justice John Roberts, who provided the crucial vote to establish the ACA's constitutionality, said little, but another potential swing justice, Anthony Kennedy, probed deeply into the implications of the plaintiffs' case in a way that did not appear to benefit them.

If subsidies are really unavailable in states that opted for the federal exchange — a position that would seem to contradict other sections of the law — the natural consequence would be that health insurance policies in those states would be too expensive by the ACA's own terms for some millions of customers to afford, thus making them exempt from the requirement that they buy insurance. If that happens, many healthy people will opt to go without coverage, but those who are sick will likely stay in the exchanges. That would drive up the cost of policies to the point that they would become unaffordable to even more people, prompting a negative cycle that would eventually destroy the insurance marketplaces in at least those states and possibly those, like Maryland, that created their own exchanges as well.

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This case has been characterized as a test of statutory interpretation — that is, whether we should focus only on the precise words of a particular passage or also take into account a statute's broader context. But Justice Kennedy said that if the court adopted the plaintiffs' interpretation, it would cause a "serious constitutional problem" — unconstitutional coercion by the federal government to force the states to establish exchanges, lest their insurance markets collapse.

Justice Kennedy identified other potential "anomalies" that would arise as a result of the plaintiffs' interpretation. For example, reading the language in question in the same way in another section of the act would seem to suggest that people in states that use the federal exchange could not buy insurance on it at all. But the issue of federal coercion is an important one, particularly given that a similar principle applied three years ago when the court ruled that Congress could not compel the states to expand Medicaid eligibility under the act. It could lead to the conclusion that the Internal Revenue Service's interpretation of that phrase to allow subsidies in states that use the federal exchange is permissible, or that if the statute must mean what the plaintiffs say, then the restriction it implies must be stricken as unconstitutional. Either way, the law survives.

But even if the plaintiffs win the case, we can't be so certain that the nation's health care system will magically go back to where it was before the Affordable Care Act. Millions of people now have health insurance, either through the exchanges or Medicaid, who did not have it before. Will elected officials, even in deeply Republican states, be willing to stand by while they lose it? Will they be content to see insurance rates spiral out of control? Would Republicans in Congress really be eager to take the only logical step if subsidies are unavailable in most states, which would be to repeal the requirement that insurance companies provide coverage regardless of pre-existing conditions? Are Americans really clamoring for a return to lifetime coverage limits? Obamacare may still poll badly, but those seeking to kill it may discover that the public likes the alternative even less.

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