tax increase.” After that ruling, con- servatives pondered how best to attack Obamacare. The act expressly stated that tax credits were to be offered in “exchanges established by the state.” Obamacare “architect” and MIT
professor Jonathan Gruber infamous- ly addressed this feature in Jan- uary 2012, stating: “If you’re a state and you don’t set up an exchange that means your citi- zens don’t get their tax credits. But your citizens still pay the taxes that support this bill.” According to Gruber, then,
have,” said White House press secre- tary Josh Earnest. But George Mason University law
professor Michael S. Greve tells News- max that if Obamacare weren’t such a high-profile law “this would be an easy case.”
The loss of subsidies that enable
the law meant what it said: Cit- izens of states that refused to set up exchanges would not be eligible for subsidies. He would later walk back those remarks, saying he misspoke. That a whopping 36 states opted not to establish an exchange caught the administration by surprise. Of course, the federal government could step in and set up its own online markets. But what about the subsi- dies? Without them, coverage would remain unaffordable for millions. The IRS ruled the act’s intent was
to extend a tax-credit subsidy to any- one in any state who qualified for it. Today, well over 5 million people liv- ing in states that opted not to set up exchanges are receiving those taxpay- er subsidies. The plaintiffs in King v. Burwell
argue that this flies in the face of Con- gress’ stated intent, namely, that the subsidies would be offered by state- established exchanges. The administration is doing every-
thing it can to counter that complaint. It argues courts traditionally give bureaucrats broad leeway to imple- ment the laws that Congress passes. “This lawsuit reflects just another
partisan attempt to undermine the Affordable Care Act and to strip mil- lions of American families of tax cred- its that Congress intended for them to
Without the three pillars of Obamacare — subsidies, the individual mandate, and the business mandate — what would remain would be a shattered system.
He says, “‘By a state’ cannot mean
‘in a state by the federal government.’ It’s ridiculous, and there are tons of cases that support that.” If Greve is right and the Supreme
Court rules accordingly, much more than just the subsidies will be affected in the 36 states that have opted out of the exchanges. Two other key pillars of Obamacare
will be neutralized as well: The indi- vidual mandate, which was the focus of the court’s original case in 2012, and the business mandate. The latter calls for stiff penalties for employers who fail to offer Obamacare-compliant insurance coverage.
people to afford insurance would render that section of the law largely moot: Fining people for not buying policies they can’t afford would be a nonstarter. The “business mandate” would collapse as well, for a different reason. The fines that give the mandate its teeth only come into play once an employee is thrown onto the exchanges and receives a subsidy. If the sub- sidies are no longer offered in 36 states, no trigger would exist to touch off the fines. “I think it’s really more of a deathblow to Obamacare than people real-
ize,” says Curt Levey, president of the Committee for Justice, a conservative organization that promotes constitu- tional governance. Without the three pillars of Obam-
acare — subsidies, the individual mandate, and the business mandate — what would remain would be a shattered system. Some states would have exchanges and subsidies, while many would not. Firms in states still operating under the business mandate would be at a disadvantage compared to companies in non-mandate states. Post-subsidy, insurance companies
would be required to cover pre-existing conditions but without the universal
Subsidies — a Real Game Changer for Obamacare
H
ow would U.S. healthcare change if the Supreme Court were to toss out the Affordable Care Act’s federal tax-credit subsidies in 36 states?
Here is a look at Obamacare with and without the subsidies, based on a recent Rand Corporation analysis:
With Subsidies Without Subsidies
Enrollment 13.7 million
4.1 million [-70%]
Premium Cost [+/- change]* $3,450
$5,060 [+47%] * Premium scenario is for a 40-year-old nonsmoker buying a silver plan on the exchange. Source: Rand Corporation report “The Effect of Eliminating the Affordable Care Act’s Tax Credits in Federally Facilitated Marketplaces.”
MARCH 2015 | NEWSMAX 9
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