Weekend Economists Deck the Halls Christmas Day 2013

[Demeter]

22. Obamacare Is Over (If You Want It)

http://www.slate.com/articles/news_and_politics/politics/2013/12/legal_case_against_obamacare_halbig_v_sebelius_and_state_legislatures.html

... Earlier this month, a U.S. district court heard arguments in Halbig v. Sebelius, a legal challenge to the Affordable Care Act brought by plaintiffs who live in states that didn’t set up health care exchanges. It’s a fairly simple argument. The Affordable Care Act stated that “individuals who are identified by an Exchange established by the State” would be eligible for subsidies when they bought health care. People living in the many exchange-free states were getting subsidies (and becoming subject to fines) anyway, seemingly contradicting the letter of the law. So shouldn’t those states be denied the subsidies? Sure, it would devastate all the insurers expecting new customers, and it would bring down the law, but a “state” is a “state.”

One Halbig plaintiff is a Republican consultant, another is a Bush administration veteran, and the intent of the lawsuit is extremely hard to miss. It’s also hard to find a sympathetic expert on the law who buys into the theory. “That this is a drafting error is obvious to anyone who understands the ACA,” wrote Washington & Lee law professor Timothy Jost two years ago. “Section 1311 of the ACA requests the states to establish American Health Benefit Exchanges and sets out the duties of the exchanges. Section 1321 of the ACA, however, provides that if a state elects not to establish an exchange or fails to do so, HHS must ‘establish and operate’ an exchange in such a state and ‘take such actions as are necessary to implement’ the other requirements of title I of the ACA, which includes section 1401.”

See? If the state chooses not to participate, the federal government steps in to serve individuals trying to buy health insurance, subsidies and all. Easy. Unless you’re a conservative who wants to scrap the Affordable Care Act, in which case Jost must be wrong, and an argument born in a contrarian Cato Institute research paper is obviously right.

“The plain text of the statute contradicts the way the Obama administration has implemented it,” Cruz told me when I asked about Halbig. “The law is clear that the individual mandate and the accompanying subsidies only apply if a state sets up an exchange. The Obama administration simply said, ‘we’re not following that part of the law. We’re going to apply it without a state exchange.’ In our constitutional system, if a president doesn’t like a law, there’s a mechanism to address that. You go to Congress, and you change the law.”

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“The law is written that way, that people who live in states that are getting insurance through a federal exchange, not a state exchange—none of them are eligible,” said Wyoming Sen. John Barrasso, a medical doctor often called on by the GOP to shape anti-Obamacare messaging.* “It’s an interesting question, about when a law is passed, what it actually says, what power a president has to change it without going back to Congress.”

This worries supporters of the law. Several times now, they’ve laughed off a legal or constitutional challenge to their work as the moonlight raving of tricorner-hat-wearing kooks. Several times, they have watched these challenges rise to high courts and impact the law. Last year’s Supreme Court rulings rescued the individual mandate while allowing states to opt out of the Medicaid expansion. The result has been more than 4 million people in red America tumbling into a “Medicaid gap.” As Alec MacGillis has reported, the Cato Institute’s Michael Cannon spent much of the Obamacare era lobbying red states not to build exchanges. He wasn’t alone, but he was unusually explicit: He said in May 2012 that he wanted to maximize the number of states “in a position to drive a stake through the heart of this very bad law.”

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THE ECONOMICS WILL GET IT, LONG BEFORE THE LEGAL WRANGLING IS COMPLETE

BUT IT KEEPS A LOT OF GOP TIME AND MONEY OFF OTHER ISSUES...