Friday, November 7, 2014

Supreme Court Takes the Obamacare Subsidy Case--Justices Will Rule Before July 1

In a Wow moment, the Supreme Court announced Friday that they will take one of the four pending "Halbig" cases––specifically King v. Burwell.

The issue is over whether the new health law actually authorizes the payment of premium subsidies in the 37 states that will rely upon the federal government to run their exchange in 2015.

This effort is being made on a number of fronts but has been generally know as the "Halbig" challenge. I guess we will now call it the King challenge.

If the Supreme Court eventually affirms this challenge, anyone receiving a health insurance subsidy in the 37 states run by the feds would immediately lose it. Given that the bulk of those currently getting subsides are at the lower income range for those subsidy eligible, most would likely drop their Obamacare insurance unless they were so sick it made sense for them to beg, borrow, or steal the money they would need to continue making premium payments.

The result would be a much smaller Obamacare insurance pool disproportionately filled with sick people.

Even if a state rushed to convert its status to that of a state exchange in order for its citizens to continue to receive their insurance subsidies, the process would take at least months. In the reddest states that have been fighting Obamacare, it could take far longer. In the meantime, the entire off and on exchange individual health insurance market in these states would be dramatically destabilized.

I recently participated in a forum at the Cato Institute examining the latest federal court challenges to the Affordable Care Act.

A panel of legal scholars presented the case for and against the Halbig challenge. In the end, it sounded like a draw to me. Believing the Supreme Court would not want to wreck something as big as Obamacare unless they had an overwhelming reason to do so, I am left with the sense that King will not prevail. Don't forget Chief Justice Roberts had that chance two years ago and didn't wreck it.

But the mere fact this case is now officially before the Supreme Court means the challenge many supporters of the Affordable Care Act have called the greatest existential threat to Obamacare has to be taken seriously.

I was sort of the skunk at the garden party for suggesting the immediate impact of King would be nothing short of devastating in the 37 state individual health insurance markets––on and off the federal exchanges.

I have been a critic of Obamacare. But I also believe the way to solve this is through the political process where change can occur in a way that provides those now covered a soft landing during the transition, not in the courts where an affirmative finding for King would instantly destabilize the insurance markets in these states leaving millions uncovered until each of the states––or the federal government––could work out a solution.

For those of you interested in this case and the impact it could have, I suggest you take a look at the Cato video of some of the specific presentations (each speaker was limited to twelve minutes).

I will suggest that the case for King was best made by Jonathan Adler and the case against was best made by David Ziff and can be seen here.

My panel debating the impact King would have on the insurance markets can be seen here.

Obamacare just had a terrible week.

Supporters had expected that a year after its launch the new health law would be well entrenched because of popular support. But on Tuesday, voters made it clear that the debate over Obamacare is nowhere near over.

Then on Friday, the Supreme Court announced they aren't done with the law over an issue that could immediately kill the insurance subsides for millions.

All of this on the eve of the second open enrollment.

Obamacare has not cleared the tower.


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