July 30 2014
A legal challenge to the Affordable Care Act, Halbig v. Burwell, gained momentum and notoriety when a panel of judges on the U.S. Court of Appeals for the D.C. Circuit ruled that the Obama Administration acted illegally in authorizing subsidies and tax credits in the federal exchange. The text and intent of the law, challengers allege, was for subsidies to only be available through state-established exchanges (not the federal exchange).
Of course, Halbig proponents would be happy to see their case prevail at the Supreme Court level. This would deal a major blow to Obamacare. But regardless of any further rulings, this case – just by its existence – should undermine support for President Obama’s health law by highlighting the lawlessness and incompetence of big government.
The debate over health policy in the United States largely revolves around one question: What role should the government play? Some people argue that the government should play the role of “single-payer,” the one and only source of reimbursement for medical care. Others believe the government should stay out of it.
Obamacare is somewhere in the middle, although it is significantly closer to government-run health care. Millions more Americans have become dependent on the government for their health insurance (through the Medicaid expansion and subsidized Obamacare exchange plans), and what remains of the private-sector is more highly regulated than ever before. All insurance plans must meet the federal government standard.
How much do Americans trust the government to competently deliver (or help deliver) health insurance? In 2013, Gallup asked if Americans believed it was the government’s responsibility to provide health insurance, and 56 percent of adults said no. The issues and the facts of the Halbig case will only serve to bring more Americans to this point of view.
Supporters of Obamacare are reading from a confused script in their response to this case. Some say that it was a “drafting error” that resulted in the omission of subsidies from the federal exchange. Others believed that very few – perhaps none – of the states would decline to establish their own exchanges, and that’s why this issue was not discussed previously.
Not one, but two videos surfaced of Jonathan Gruber, also known as the architect of Obamacare, explaining in 2012 that, “if you’re a state and you don’t set up an exchange, that means that your citizens don’t get tax credits.” This is pretty damning evidence that the law intended for the subsidies to act as a carrot, or an incentive, to get states to run their own exchanges.
Regardless of what happens in the courts, this looks bad. None of the possible explanations build trust in government-run health care. How could a “drafting error” imperil the implementation of a major reform in 36 states, affecting as many as 57 million people and 250,000 firms? Or the other explanation – perhaps even worse – is this: Out of desperation to fix this error, the executive branch would commit behind-the-scenes trickery, illegal and unauthorized executive rulings within the IRS, and then lie about their intent all along?
This reeks of a federal government that is lawless and incompetent – not the entity you want in charge of your health care.
Before Obamacare, much of health insurance regulation was the purview of states. Even this was better, since state governments are closer to the people. But the design of Obamacare was not meant to honor federalism. It took a Supreme Court ruling to make the Medicaid expansion optional for states, and a vital piece of evidence in this decision was a letter from then-HHS Secretary Kathleen Sebelius, who threatened funding for the state of Arizona’s entire Medicaid program if the state did not implement CHIP as dictated by the feds. Clearly, this Administration is not afraid to try to bully states into compliance by withholding federal funds.
The original language about exchanges said, “Each state shall establish…” an exchange. No room for choice. But a later revision provided a fallback plan. Perhaps the sloppy writers of this law foresaw a legal challenge in forcing states to create their own exchanges. A later section explains that if a state “elects” not to establish an exchange, the federal government would do so in their place. The question in Halbig, is whether the 36 states who defaulted to this arrangement would have federal subsidies, tax credits, and even the individual and employer mandates they trigger.
The fact that this is even in question creates political trouble for Obamacare and for all government-run health care supporters. It should create further questions in the minds of Americans about whether the federal government should play such a central role in something so personal and so vital as our health insurance and health care.