By Will Reed
Everyone remembers the highly-publicized 2012 challenge
to the Affordable Care Act, or "Obamacare," where conservative Chief
Justice John Roberts sided with the Supreme Court's liberal wing to creatively
uphold the legality of the key domestic policy of President Obama's first
term. The Court found that the
individual mandate of the ACA is not supported by the Commerce Clause, as most
commentators expected, but is constitutional thanks to the Taxing and Spending
Clause. Common sense would lead one to
believe that the result of National
Federation of Independent Business v. Sebelius (2012) was the unambiguous,
ultimate, final confirmation of the legality and permanence of Obamacare and an
end to Republican attempts to dismantle the law. Yet, during the first week of March 2015, the
Supreme Court heard oral arguments in King
v Burwell, a second major legal challenge to the law which commentators
say, once again, could effectively dismantle the law.
The SCOTUSBlog
defines the issue as follows:
"Whether the
Internal Revenue Service may permissibly promulgate regulations to extend
tax-credit subsidies to coverage purchased through exchanges established by the
federal government under Section 1321 of the Patient Protection and Affordable
Care Act." [1]
To understand the
implications of the issue before the Supreme Court, it is necessary to dissect some
of the inner workings of the Affordable Care Act itself. The backbone of Obamacare is the system of
online healthcare "exchanges" that would be created where Americans
who don't receive health insurance through their employer would go to purchase
insurance. The hope was that each state
would create and operate its own exchange.
The 50 million Americans lacking health insurance would be brought
together in the exchanges would expand the risk pools and lead to more
competition thus lowering costs of health insurance for everyone.[2] While the law intended for this to be done at
the state level, many states, due to technical concerns or outright opposition
to the law, opted to let the Federal government run the exchange in place of
the state.
In the same section that describes how
exchanges should be established, the Affordable Care Act also establishes tax
credit subsidies available to those purchasing healthcare through the
system. The exact wording is that the
subsidies are available to those purchasing healthcare "established by the
state."
The issue in King v. Burwell is whether these
subsidies can be distributed in states which chose not to establish a state
exchange and rely on the federal government to operate its exchange. The first extreme position the Supreme Court
could take is interpreting the text strictly which would effectively end
subsidies, and much of the substance of the ACA, to people purchasing
healthcare from the 37 states that do not operate state exchanges. This ruling would essentially be saying that
the Court believes Congress intentionally worded the law to deny subsidies from
people in states that use a federal exchange.[3] The other extreme would be for the Court to
keep the law completely intact and subsidies would continue. This could be done effectively by the Court
finding the plaintiffs do not have standing or by accepting a loose
interpretation of the term; an interpretation that is more beneficial to health
insurance buyers.
While it is impossible to know the exact effects of a ruling
striking down the subsidies, commentators estimate that 8 million people would
lose health insurance and millions more would see costs double or triple. Others predict that the spike in prices would
send markets into chaos and eventually collapse.[4] One of the main concerns has been the effect striking
down the subsidies would have on children who receive healthcare through their
parents as proscribed by the Affordable Care Act and would potentially lose
their coverage. All of these negative
effects would be concentrated among the poor who benefit the most from the
subsidies of the ACA.[5]
When considering that the government initially assumed
each state would in fact set up its own exchange together with the language of
the subsidy clause, there does not seem to be any question that the government
would have wanted its subsidies to be extended to all Obamacare exchange
participants. However, lawyers and
research organizations generally agree that, as worded, the law punishes states
that do not establish an exchange system.
Of course, eight million Americans losing health
insurance is not a politically beneficial outcome for Republicans or
Democrats. One obvious outcome of a
ruling striking down the federal subsidies would be many states, burdened by
the political reality of forcing their citizens to pay taxes funding Obamacare
while not providing the benefit of the law, would set up exchanges thus
mitigating the effect. Beyond that,
there is already talk of Congressional Republicans seeking to fill the void
that such a ruling would leave with their own system restoring some of the
subsidies.[6]
Politically of course, the stakes could not be higher
for President Obama and the Affordable Care Act. The stakes are similarly high for purchasers
of health insurance on one of the federal exchanges. Oral arguments were heard in the first week
of March and the Court's ruling is expected June or July. As expected, the decision will likely hinge
on the decision of swing-vote Justice Robert Kennedy and, due to his decision
in the original ACA case, Chief Justice Roberts.
[1]
SCOTUSBlog
[2]
Nussbaum. Health Insurance Exchanges.
Bloomberg. Mar 4, 2015. Web http://www.bloombergview.com/quicktake/health-insurance-exchanges
[3] Ryan Teague Beckwith. 4 ways
the Supreme Court could rule on Obamacare.
Time. March 4, 2015. Web
[4]
Ian MIllhisher. Republican Governor Says He Wants The Supreme Court
Case Against Obamacare To Lose. ThinkProgress. March 16, 2015. Web
[5]
Stephen Stromberg. What would happen to
children if the Supreme Court dismembers Obamacare. March 17, 2015. Web
[6]
Sean Parnell. Supreme Court Hears Obamacare Case.
March 18, 2015. Web http://news.heartland.org/newspaper-article/2015/03/26/supreme-court-hears-obamacare-case
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