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ObamaCare Clusterfuck: Federal judge strikes down subsidies in states without their own exchanges

Modern Healthcare:

In a legal setback for the Obama administration, a federal judge in Oklahoma ruled Tuesday that people in states that rely on the federal insurance exchange are not eligible for Obamacare premium subsidies to help them pay for coverage.

Judge Ronald White, a George W. Bush appointee, invalidated an Internal Revenue Service rule interpreting the Patient Protection and Affordable Care Act to allow the premium tax credits in states that have not established their own exchange. “The court holds that the IRS Rule is arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law,” White wrote.

In his ruling, White rejected the argument that striking down the subsidies would cripple the entire healthcare reform law. “Congress is free to amend the ACA to provide for tax credits in both state and federal exchanges, if that is the legislative will,” he wrote.

Exactly. I have to say it, I'm with the conservative lunatics on this one (regardless of their motivations). If you want to have the rule of law, then you need to write the law so you aren't reduced to saying "But I really meant that!" when people read it, and the administration really did (modulo conspiracy theories) butcher the drafting.[1] There are other cases in the works:

White put his ruling on hold pending an expected appeal by the Obama administration, which means subsidies will continue to be available in Oklahoma.

The Oklahoma court is the first district court to rule that the language of the Affordable Care Act does not allow subsidies in states that have not established their own marketplaces. Experts say the issue may go up to the U.S. Supreme Court, and the outcome will be critical to the fate of the healthcare reform law. Without the subsidies in the 36 states that use the federal exchange, millions of people likely would lose their coverage and the law's insurance reforms would unravel.

And then there are the other cases:

n July, in a split decision in Halbig v. Burwell, a three-judge panel from the U.S. Circuit Court of Appeals for the District of Columbia also struck down the subsidies. Two Republican-appointed judges ruled against the subsidies, while a Democratic-appointed judge dissented. But that decision was invalidated when the full D.C. Circuit Court agreed to reconsider the case. Oral arguments are scheduled for Dec. 17.

On the same day the D.C. panel ruled against the administration in Halbig, the 4th Circuit Court panel ruled unanimously in favor of the administration on the same issue in King v. Burwell.

So the whole mess will hit the Supreme Court, and presumably a decision of some sort will issue forth in 2015. I have, of course, no idea how the Court will rule, but assuming that the first ObamaCare case was really about being able to force people into a market -- and if you are a neo-liberal "Because markets!" type of person, that's important -- the Court could well consider their real work done with that precedent, and decide to shaft Obama both on the merits, and for good clean fun.

NOTE As I wrote:

And I’m not going to talk about Halbig v. Burwell or King v. Burwell (which say that ObamaCare policies purchased through state exchanges either cannot, or can, be subsidized, respectively, depending on whether the actual text or putative Congressional intent determines the interpretation of the law). If the Roberts Court wants to scratch out “cat” and write in “dog,” because they feel Congress intended “dog,” they have the prerogative, bless their hearts, so there’s no point fussing. Which won’t prevent people from doing just that! And fortunately I’m not the judge who has to figure out the impact of Pelosi’s famous statement that “[W]e have to pass the [health care] bill so that you can find out what’s in it.” First, with Halbig and King winding their way up to the Court, Pelosi’s words have come true in ways that we never dreamed of. More importantly, if we take Pelosi at her word, is it even possible to determine Congressional intent? And although I like Sarah Kliff’s work, determining Congressional intent by reading columns in WaPo seems like a very odd suggestion indeed. For starters, why WaPo? So where do we look to determine intent?)

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Barmitt O'Bamney's picture
Submitted by Barmitt O'Bamney on

I know what they say about legislative sausage making, but this ain't no sausage. Pelosi's "we have to pass the bill to find out what's in it" remark reminds me more and more of the old Cheech & Chong skit about finding what might be dog shit in the snow.
Good thing we don't step in it.
It's not a funny joke, really, but it's not tasty sausage either.

Chromex's picture
Submitted by Chromex on

well I hate to say it, as I despise the ACA for all reasons Lambert enunciates and I also believe that Pelosi is long past her sell-by date but actually the reasoning above is flawed IMO.
Since there was no explicit disallowance of the states relying on the federal exchange, there was no unambiguous exclusion. At that point we have to look at the ENTIRE statute not just one crummy section and those arguing clear legislative intent was for such subsidies have the much better argument. Offhand I can think of about a squillion cases that break like this so those who are not lawyers might be understandably confused. As stated I would love to see this law come tumbling down and if the politicization of the law continues apace it might but IMO, it won't be because this chump judge is actually correct.
The Supreme Court opinion is the one that is legally incorrect BTW since the power to tax has been acknowldged since about 1803 as the power to destroy.
Also there are many reasons to hate Pelosi but that misquote is not one of them. What she actually said is" we have to pass the law so YOU can find out what's in it"( because of the shrill death panel rhetoric pre passage etc) . She was wrong of course to think that if everyone knew what was in the bill they would be overjoyed but the statement she is often credited with she did not make and the one she did make seems reasonable in context. Although I doubt she knew what was in the bill so there's that. But then most legislators do not know what is in the bill they just vote as leadership dictates. Leadership usually does not know either , they just do as the administration and/or corporate donors / interest groups tell them.

CMike's picture
Submitted by CMike on

Governments must have the power to tax but given the Supremacy Clause, because the power to tax provides the imposer the power to destroy the imposed upon, it follows that states may not "by taxation or otherwise... retard, impede, burden or in any manner control" the lawful and Constitutional operations of the federal government (McCulloch had to do with whether Maryland could require the 2nd Bank of the United States to pay a fee for each note the bank circulated within the state's borders).

Regardless, any U.S. Supreme Court opinion issued in the twenty-first century would supersede any U.S. Supreme Court opinion issued in the nineteenth century as any later by a day ruling on a point of law overturns any earlier one when they are in conflict.

mellon's picture
Submitted by mellon on

...

a perfect storm that just so happens to be designed to destroy "by accident" our access to public health care forever.

Public healthcare works, Obamacare is a scam that cannot work - we should see this-

http://www.pnhp.org/resources/pnhp-research-the-case-for-a-national-heal...

I can see the last chance of US healthcare policy freedom slipping away.

"Beware of Greeks bearing gifts."