In dueling federal appeals court decisions last week, judges issued contradictory rulings about the president’s signature legislation, arriving at opposite interpretations of the plain language of the Affordable Care Act.
The circuit split likely means that the controversial law’s fate will be left to the U.S. Supreme Court, yet again.
At issue in the latest legal challenges are the premium subsidies provided through insurance exchanges, where most people who don’t get health coverage through their employer can purchase healthcare plans.
According to the law, those subsidies are made available through an exchange set up by a state, but the states were not required to set up an exchange.
If you’ve paid attention to the news these last several years, you know that 36 states, including Texas, elected not to set up exchanges, instead leaving it to the federal government to establish and operate insurance marketplaces, as it is entitled to do.
But what the federal government is not entitled to do under the plain text of the law — confirmed by the D.C. circuit appeals court — is to provide subsidies that make it possible for millions of Americans to purchase otherwise unaffordable healthcare coverage through the federal exchange.
For Texans purchasing coverage through the federal exchange, that means that the ACA doesn’t seem to offer a mechanism through which you can receive any subsidies.
So, if you like your subsidies, you may not be able to keep them.
It stands to reason that when members of Congress wrote the law, they appreciated how the premium subsidies would be a necessary, and not an optional, component of its success.
Defending the government in a brief to the D.C. circuit, a group of economic scholars argued as much: “The ability to offer subsidies is not a gratuitous ‘carrot’ dangled in front of States to lure them to set up their own Exchanges. Rather, subsidies are a crucial component of the ACA legislative scheme. ...”
Liberal pundit Ezra Klein similarly posits that, “Everyone in Congress — including the Congressional Budget Office in its estimates of Obamacare’s cost — assumed subsidies would flow through federal exchanges.”
But if this is how Congress intended for the law to operate, why wasn’t it more explicit when writing the ACA?
That question is perhaps best answered by MIT economist and ACA architect Jonathan Gruber, who in a widely reported video that surfaced last week confirmed for an audience in 2012 what many already suspected: The subsidy provisions written in the law were totally intentional and wholly political.
In Gruber’s own words: “If you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits.”
Essentially, the law’s authors sought to withhold subsidies to states that failed to set up their own exchanges as a means of incentivizing them to cooperate with the federal scheme.
There is little doubt that Democrats in Congress, the president and perhaps Gruber himself, never expected that 36 states would forgo the federal government’s offer.
But they should have known, given that the ACA — unlike Medicare or any other transformative social policy initiative in U.S. history — was rammed through Congress, circumventing traditional legislative processes and passed without a single Republican vote, and it remains extremely unpopular even four years after its passage.
Unfortunately, the partisanship that made the ACA possible is also making the law confusing, frustrating, litigious and potentially unworkable.
Under normal circumstances, Congress would amend a contested law to fulfill its original goals without violating the Constitution. But Democrats refuse to reopen the ACA because they know that without majorities in both houses, they could lose it all.
If the Supreme Court takes up the case next year, as many expect it will, Democrats in Congress may have no other option than to start over.
And the biggest lesson from the latest court decisions might be the most obvious: Laws that are forced through Congress without any attempt to achieve a bipartisan consensus are not built for long-term success.