OBAMACARE & TAX SUBSIDIES FOR FEDERAL EXCHANGES - WHAT WILL THE SUPREME COURT'S DECISION BE?

As most of you know, I am not a fan of Obamacare/The Affordable Care Act. I believe it to be a well-intentioned and dangerously misguided example of federal over-reach. A few years ago, I was surprised when the Supreme Court's decision in support of the constitutionality of the ACA was announced. Back on June 28, 2012, for the first time in my life, I actually obtained the transcripts from the Supreme Court's decision. It was a fascinating read and I posted a blog about the court's logic the next day. It's been a few years since then and The Affordable Care Act is again under review by the U.S. Supreme Court.

And the stakes are huge.

At issue is whether federal subsidies should flow to members of federally created health insurance exchanges. The law states that federal subsidies for health insurance will flow to “an Exchange established by the State". Taken at face value, given that only 14 states set up their own exchanges, this means that millions of people currently covered under federal exchanges won't receive federal subsidies. If this happens, then many people will not be able to afford their health insurance coverage because their health insurance premiums will not be subsidized. They will then lapse the coverage provided under the federal exchange and Obama's national healthcare dream will collapse under its own weight. 

Like I said, the stakes are big.

The arguments, pro and con, regarding the law go something like this:

• Anti ACAers Say - The ACA clearly says that subsidies flow to exchanges established by the states. You and I both know that those subsidies were the carrot to get states to build the exchanges. If states didn't build the exchanges, they shouldn't receive the subsidies. Carrots and sticks go together! Just because the federal government stepped in to create exchanges because several states didn't should not mean that those states should then get the federal subsidies. There is no "federal government stepping in for the state" issue!
• Pro ACAers Say - The ACA needs to be read in context (Personal comment - I don't know what this "context" point means. The law is clear about subsidies). Additionally, the Supreme Court needs to review the intent of the law, not just the wording of the law. In that light, even if a strict (my comment "normal") reading of the law says the subsidies need to go to state exchanges only, because that interpretation would effectively destroy the law, you (Supreme Court) need to do whatever you can to support the intent of the law.

While I am not hearing the argument made directly, there is something from the 2012 Supreme Court decision that may negatively impact the Anti-ACA position (my position). Back in 2012 when the ACA first went before the Supreme Court, the ACA said that if states didn't set up exchanges, the federal government could completely withhold Medicaid funding from the offending state. It was harsh...and the Supreme Court struck down this provision of the ACA as unconstitutional. I'm paraphrasing from memory, but a justice basically said, "The federal government can create incentives for the states to act. It cannot hold a gun to a state's head. There's a difference." I am not an attorney, but as the Supreme Court didn't like the federal government's attempt to remove federal funding of Medicaid to those states that didn't follow its lead on the changes it wanted to make in Medicaid, it sounds to me like the Supreme Court could take a similar position on the Anti-ACAers goal of not providing ANY subsidies to states that didn't set up their own exchanges. 

I hate to say it, but I believe the White House is going to win by losing. In a not so funny bit of irony, I believe that the Supreme Court will declare that the provision regarding federal subsidies going only to state created exchanges - a provision that was clearly in the law that the Administration wanted passed - is unconstitutional. 

Stay well.

Bruce