Obamacare subsidy ruling cause for worry, not panic

07/22/2014 1:27 PM

08/06/2014 4:31 PM

If you favor accessible health care and the Affordable Care Act, it’s too soon to panic over a federal appeals court ruling that would knock out subsidies for roughly 5 million people enrolled in the federally created online insurance exchanges.

But worry? Oh yes. Worrying would be in order right now.

The Affordable Care Act, as its opponents like to note, is 2,409 pages long. And some of the more ambitious adversaries have made it a point to fine-comb every one of them.

Their search turned up a vulnerability: a section which states that subsidized insurance policies should be available to those “enrolled through an Exchange established by the state.”

The problem is, most of the exchanges, 36 in all, weren’t established by their states. They were created and are operated by the federal government, either because states refused to set up their own exchanges (like Missouri and Kansas) or because states made a cooperative arrangement with the federal government.

Voila! The opponents had found their weak spot. If the exchanges aren’t established by the state, they argued, they shouldn’t be eligible for subsidies.

When writing the law, legislators optimistically thought most states would create exchanges, but they created a default federal exchange just in case. And surely they intended that the subsidies be available through the federal exchange as well. But the faulty wording got passed into law, so here we are.

This ought to be an easy fix for Congress, which could simply amend the law. But that would be too much to ask of the current crew in Washington. And so the matter has landed in court — several of them. And the results are starting to roll in.

District courts have all affirmed the obvious — that Congress wouldn’t have legislated the creation of the federal exchanges and deprived them of subsidies.

But today, a ruling was handed down from the D.C. Circuit Court of Appeals in which two judges of a panel of three said that the language of the law made the subsidies illegal. The third judge disagreed vehemently.

A couple of hours later, an appeals court in Richmond, Va., said that subsidies in the federally run exchanges were perfectly OK.

So for the time being, the subsidies will stand. The government will appeal the panel’s ruling to the full D.C. Court of Appeals. A couple more appeals courts will weigh in.

Eventually, the entire matter may end up before the U.S. Supreme Court. Hence the reason to worry. You never know whether the majority will stand by the obvious intent of a law or go all activist and toss all or a portion of it to the curb.

Losing the subsidies would cause a lot of people to leave the exchanges. It would create a mess with the mandate that everyone must have insurance (unless your state is too fixated on opposing Obamacare to go for the Medicaid expansion). It would make premiums overall more expensive.

You would like to think that Congress would fix this thing rather than create that sort of havoc. Unfortunately, havoc is exactly what opponents of the Affordable Care Act are counting on.

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