Three Potential Paths Post-Obamacare Ruling

Published March 11, 2015

Consumer Power Report #454

There are three paths Congress could take if the Supreme Court strikes down much of the Obamacare insurance exchange subsidy system in King v. Burwell.

The three options are moving down a path toward doing nothing, a path toward doing something, or a path toward doing everything.

The do-nothing path is essentially for members of Congress to shrug their shoulders and say it’s the White House’s problem the law is such a mess. The do-everything path would amount to extending existing subsidies for everyone who has them for two years, which would basically undo the Supreme Court’s ruling and kick the can to the next presidential election.

It’s the do-something camp where there are a variety of views. Freshman Sen. Ben Sasse (R-NE) is making the case for extending the entitlement but also freezing enrollment in Obamacare.

The Washington Times quoted Sasse as saying, “Nothing that I’m proposing is a continuation of Obamacare, expansion or extension or fix. It’s transitional assistance for 6 million disrupted people, but the assistance comes entirely outside of Obamacare so that we can then have the big national conversation we need in 2016.”

Under Sasse’s transition bill, those affected by the court’s ruling could keep their Obamacare coverage for an 18-month grace period, akin to “Cobra” coverage for people who leave or lose their jobs. The government would cover 65 percent of their premiums for the first six months before phasing assistance down 5 percentage points each month until it disappears in the subsequent year.

Sasse has gone out of his way to insist his plan is not an invitation to bail out the Democrats and their 2010 law, as it would prohibit new customers in the federal exchange by enshrining, in law, a prohibition on subsidies in those states.

Keeping the Money Flowing

But what happens when that assistance runs out? Writing at the Washington Examiner, Byron York says Republicans could potentially become the dog that caught the car:

“The prospect of seeing those people lose their subsidies—even though some have received them for a short period of time, and even though Obamacare has imposed burdensome costs on many other Americans—is just too much for Republican lawmakers to risk,” York wrote.

York said, “Hill Republicans fear such a scenario would create huge pressure on Republican governors, who originally declined to create Obamacare exchanges in their states, to change course and set up state exchanges. … To avoid all that, GOP lawmakers have decided to keep the money flowing. Maybe the payments won’t be called subsidies, but they will be subsidies. The essence of Obamacare—government subsidizing the purchase of health insurance premiums—will remain intact.”

Accepting Entitlement Assumptions

It’s possible the country lost something significant post-2012, when Republicans started saying entitlements for able-bodied, childless working adults were okay—and not just okay, but that we as a nation needed to sustain them out of a sense of moral responsibility. That was pretty much unprecedented in the history of bipartisan politics. The GOP never really conceded that idea during the welfare reform fight, the fights over unemployment benefits, the fights over Medicare and Medicaid, or in any other major policy debate, until now.

Everybody talks as if the ACA provides just another form of health care, when it’s really one of the most destructive “benefits” you could create in terms of disincentives for work. Republicans seem eager to have their fingerprints on “saving” Obamacare, at least for a transitional period, should the Supreme Court rule against the administration. Unfortunately for the country, that period may never end.

Benjamin Domenech ([email protected]) is a senior fellow in health care at The Heartland Institute.



Many states hate the law’s penalties on their employers more than they love its subsidies. However, the penalties only get triggered when subsidies become available within their borders and uninsured workers who purchase coverage avail of them. Hence, so long as a state refuses to set up its own exchange and Section 1311 bars the federal government from handing out subsidies through its own exchange, they can shield their resident employers. Forcing a state to accept subsidies, they insist, would run afoul of the Constitution’s commitment to federalism.

However, there are also states that have opted for a federal exchange because they simply didn’t want the headache of having to set up their own. If Uncle Sam now withholds subsidies, it’ll make coverage unaffordable for many of their residents, to be sure. But the bigger problem is that it’ll send their exchanges into a death spiral even as their individual market has been completely upended, leaving anyone who doesn’t have employer-sponsored coverage literally nowhere to go.

Indeed, making federal subsidies conditional on a state setting up its own exchange is also unconstitutionally coercive, the administration insists. It is precisely the kind of thing that the court said Uncle Sam can’t do in the last Obamacare challenge to ObamaCare, NFIB v. Sebelius, when it barred the administration from withholding all, not just additional, Medicaid funding from states that refused to expand the program as per its bidding. “Our reading is the pro-federalism ruling,” noted Solicitor General Donald Verrilli, who argued the administration’s case.

Ordinarily, when disputes over the proper reading of a statute arise, the Supremes opt for the reading that is most consistent with the Constitution–or least constitutionally problematic. But in this case, each side claims to be more constitutionally consistent than the other, so this rule doesn’t offer a way out.

Courts also tend to defer to administrative agencies’ interpretation of statutes–something called Chevron deference. But New York University law professor Richard Epstein has pointed out that the problem with applying Chevron deference in this case is that the court would have to ignore a straightforward reading of the statutory text that a future (possibly Republican) administration might well legitimately invoke. This would potentially put the court in the position of having to go along with “wide partisan variance” in interpreting the statute, shredding the rule of law.

But the only reason the court is confronting this huge mess, as Justice Antonin Scalia pointed out, is the unorthodox parliamentary tactics that ObamaCare supporters had to deploy in order to ram it through Congress. Because Democrats lost their supermajority in the Senate after the initial bill was passed, they didn’t want to bring up for a re-vote a cleaned-up version that had gone through the normal reconciliation process in conference.

So, in essence, the administration is asking the court to hand it a victory that it couldn’t obtain through the normal legislative process. Should the justices go along, they would not only be endorsing the administration’s end run around Congress, but also putting an unelected branch of government in the position of effectively writing–or at least rewriting–the laws.

SOURCE: Shikha Dalmia, Reason


It’s possible that Kennedy’s skepticism here could be a good sign for the Obama administration. As The Washington Post‘s Jason Millman suggested, it “could show that Kennedy is more sympathetic to the federal government’s argument that all exchanges provide subsidies, so there wouldn’t be such a severe penalty to the states that refused to set up their own.”

But it’s more likely that something else is going on. The “constitutional problem” Kennedy referred to is the same problem he had with the ACA’s Medicaid expansion in NFIB, back in 2012: the statute amounted to federal coercion of the states because if they didn’t expand they would lose all federal Medicaid funds–tens of billions of dollars in some states, with disastrous consequence for state budgets. Hence the law’s Medicaid expansion violated the constitutional principle of federalism–a “gun to the head,” in Roberts’ words–and the court struck it down.

Although Carvin protested that “the government has not made that argument,” Kennedy shot back, “sometimes we think of things the government doesn’t,” and insisted that the constitutional question “is in the background of how we interpret this.” As Scotusblog noted, Kennedy later brought up the issue with the government’s lawyer, Donald Verrilli, and again suggested that the challengers’ interpretation of the statute would present a constitutional problem.

Oklahoma Attorney General Scott Pruitt dismissed Kennedy’s concerns in an op-ed in the Wall Street Journal yesterday, arguing that “there is no legal precedent for a finding of coercion based solely on the fact that a federal program does not work well when the states decline to assist in its implementation.” Using a carrot-and-stick approach to fund federal programs, he went on, “isn’t antithetical to federalism, it is federalism.”

SOURCE: John Davidson, The Federalist


Don Susswein, a principal in the national tax practice of the consulting firm McGladrey, said that the IRS has a long-standing practice of giving grace periods to people affected by court rulings that say an IRS rule or regulation is illegal.

“It is entirely normal practice,” said Susswein, while acknowledging the current case “isn’t a normal situation.”

“Court cases more commonly curb the IRS’ power to take things away, and here it would be curbing the IRS’ power to give something away,” he said.

“Generally speaking, regulations, rulings or positions are changed and struck down and invalidated all the time,” Susswein said. But if taxpayers have benefited from the IRS regulation before it was invalidated by the court, “it’s normal practice of theirs to tell the taxpayer that they can rely on [the struck-down regulation], even though it’s wrong.”

“Perhaps the most high-profile example is when the U.S. government took over GM [General Motors], or infused money into other corporations, tax lawyers would have told you that the tax losses of the ‘old GM’ could not be used by the ‘new GM.’ The statute is quite clear,” Susswein said. “But, of course, no one writing that law anticipated the dire straits of the Great Recession, or the need for an auto bailout. Accordingly, the IRS unilaterally announced that they would allow the new GM to use the tax losses of the old GM.”

In response to a Supreme Court ruling invalidating the Obamacare subsidies, “they could change the regulation to disallow the credits, but provide that the change would only apply to payments pursuant to contracts entered into after a particular date,” Susswein said. “I would think they would do that.”

SOURCE: Dan Mangan, CNBC


In a study released Wednesday, Dr. David Hogberg, health care policy analyst at the National Center for Public Policy Research, summarized a dozen free-market health care proposals – four advanced by Republican politicians and eight originating from conservative think tanks – that could end up performing that role.

“There are a lot of great ideas out there, from the Heritage Foundation and the Cato Institute to Rep. Tom Price and the Republican Study Committee,” Hogberg said in a press release. “Unfortunately, most of the media has ignored them, so most Americans are unaware that free-market alternatives to Obamacare exist.”

Hogberg is hoping to change that with his report, which simplifies the detailed proposals by evaluating them according to their treatment of 11 health care policy issue areas, such as coverage for pre-existing conditions and whether they include tax credits or subsidies.

His spreadsheet reveals areas of both consistency and variation between the plans, with some provisions that are widely shared and others that are unique.

One area of commonality, Hogberg told The Daily Caller News Foundation, is that “most of them are premised on repealing most if not all of Obamacare,” especially its more onerous aspects such as the individual mandate and minimum coverage requirements.

“The only one that stands out that does not fully do that [repeal Obamacare],” he added, “is the plan proposed by Avik Roy, which seeks to build on Obamacare.”

Roy, a senior fellow at the Manhattan Institute, defended his proposal at a recent symposium by arguing that simply repealing Obamacare would be a hollow victory, because “Obamacare is not the only thing we have to overcome.”

Far from an acceptance of defeat, though, Roy presented his plan as a means of using the Obamacare framework to scale back Medicare and Medicaid, which he said account for a much larger portion of federal health care spending.

SOURCE: Peter Fricke, Daily Caller


Providing no- or low-cost birth control pills over the counter may reduce costs and prevent up to a quarter of unplanned pregnancies, researchers say.

Many women would likely start using oral contraceptives if they were available with little or no up-front cost over the counter instead of with a prescription, they suggest in the journal Contraception.

“Making pills available without a prescription would remove the need for unnecessary, time-consuming and sometimes expensive visits to doctors’ offices and clinics,” wrote Diana Foster, the study’s lead author from the University of California, San Francisco, in an email to Reuters Health.

It would also allow women to avoid often monthly waits in line at the pharmacy, she said.

The Centers for Disease Control and Prevention says about half of U.S. pregnancies are unplanned. Most occur among younger, poorer women. The primary cause is lack of access to contraception.

The researchers used computer models to analyze several studies and databases to predict how unintended pregnancy rates might change if birth control pills were available without a prescription and with little or no cost.

Currently, 30 percent of low-income women ages 15 to 44 years use birth control pills. Other contraception methods are less common, and 18 percent of these women use no contraception.

Prescription birth control pills cost the public sector nearly $400 per woman each year. A pregnancy costs the public sector almost $3,000 from conception to the child’s second birthday, according to a 2010 study.

The authors of the new study project that 21 percent of low-income women at risk for unplanned pregnancies are very likely to use over-the-counter birth control pills, if available.

SOURCE: Kathryn Doyle, Reuters