by Jon N. Hall 3/19/15
On March 4 the Supreme Court heard oral arguments in King v. Burwell. Although we probably won’t know the verdict until June, the Washington Post reported that if “the court follows its normal pattern, it will vote on the outcome at the justices’ private conference on Friday,” which would have been March 6. But that vote may not be the end of it. As Avik Roy reported in Forbes in 2012 after the first big test of ObamaCare (NFIB v. Sebelius), sometimes votes are changed. So if the justices might still change their votes, let’s again chime in.
The issue in King is the legality of the IRS regulation that allows ObamaCare subsidies to be granted to the residents of states that did not establish their own health insurance exchanges, now called “marketplaces.”
There have been conflicting reports about how many states actually cooperated with the feds by establishing state exchanges. For instance, it was reported on March 8 on ABC’s This Week that “16 states have established those exchanges.” Here’s an interactive map from the Commonwealth Fund that helps to explain the various arrangements between the states and the feds. As you can see, there are 13 states that established their own stand-alone exchanges. And there are three states (Oregon, Nevada, and New Mexico) that have “state-run marketplaces” that use the federal website. There are six different types of arrangements in all.
But the IRS cases are not only about the subsidies; they’re also about the mandates. If the Court strikes down the IRS regulation on subsidies, the mandates would be affected. Michael F. Cannon, one of the architects of these cases, touched on that aspect when he appeared on the This Week segment linked to above:
Two is the number of benefits that states would get under the plaintiff’s interpretation of the law if they choose not to establish an exchange. They would be totally exempted from the employer mandate and their residents would largely be exempted from the individual mandate.
Mr. Cannon explains that in “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits under the PPACA,” the original paper that sparked the four IRS suits. Also, see the amicus brief Cannon filed with the Court.
Other issues examined in the March 4 hearing on King (transcript and audio) were federalism and possible coercion of the states, which concerned Justice Kennedy. Coercion as it affects subsidies would seem to be analogous to the coercion that was attempted in the Medicaid expansion that the Court struck down in NFIB. The sphinxlike Kennedy’s questions about coercion of the states have been variously interpreted. In “Federalism Will Sink, Not Save, Obamacare” on March 10 at National Review, constitutional-law professor Josh Blackman captures some of the absurdity in the government’s position:
… defenders of the law have suddenly become fair-weather federalists. They argue that the Obamacare regulation must be upheld, because invalidating it would intrude on state sovereignty. Yes, you read that right: Allowing the federal government to expand the reach of Obamacare and its mandates into states that refused to create Obamacare exchanges would promote states’ rights.
The “several States” are supposed to be the “laboratories of democracy.” But for a laboratory experiment to work, we need a “control group”; we need states that aren’t subject to the “one size fits all” dictates of ObamaCare. But there is no control group in ObamaCare to test its efficacy; all the states were expected to abide by the “wisdom” of Congress.
If the Court strikes down the IRS rule, and allows tax credit subsidies in only the 13 states that have exchanges “established by the State,” then America will have her control group and can run her experiment. Right now, we really don’t know whether ObamaCare is going to work or not. (The idea that some grey uniformity could be imposed on all the states by our central government is hateful; let the states to be different from each other.)
There were (at least) two times when Congress should have repealed ObamaCare and started over with true bipartisan cooperation. The first time was just after the NFIB decision in June 2012. The Chief Justice wrote that the “individual mandate” was unconstitutional if read as a command, and that the Commerce Clause could not justify such a command. Also, the 26 states that sued over the Medicaid expansion had won. In 2012, Congress was running its fourth trillion-dollar deficit, yet was adding a huge new entitlement. After the high court had rewritten the law so fundamentally, it was time to pull the plug.
The second time Congress should have repealed ObamaCare came at the beginning of the first enrollment in 2013 when two-thirds of the states were still refusing to establish their own exchanges. Forget that the Healthcare.gov website was an untested overpriced disaster; there was already ample evidence that neither the states nor the citizenry wanted what was on the menu. But Democrats were hell-bent on forcing it down our gullets anyway.
Let’s do a little thought experiment and look at the IRS cases against ObamaCare from another angle. Imagine that instead of there being only 13 states to have set up exchanges, that there had been 43 states to have done so. And imagine that the seven holdout states were from solid red states that had voted overwhelmingly against Obama. Given that scenario, would Obama have instructed his IRS to write the regulation in question and grant subsidies to the residents of those seven renegade states? Or would Obama have held up the holdout states as an example, using their refusal to cooperate as a political cudgel: See what the Republicans are doing to you just because they hate me.
ObamaCare is a largely untested “system” that may well exacerbate and extend the problems that were already present in American healthcare. There’s been massive resistance to it from Day One. ObamaCare was sold with lies, passed with brute force, and is now being defended with bad arguments.
Since they took over the U.S. House in 2011, Republicans have voted repeatedly to repeal ObamaCare in its entirety. But Democrat leaders in the Senate have refused to let those House bills come to the floor. They refuse to give their members the option to change their votes.
Rather than taking the chance that the Supreme Court would not nullify their votes for this very flawed law, what would the political fortunes of Democrats have been if they had instead given themselves the chance to change their votes?
Jon N. Hall is a programmer/analyst from Kansas City.