Tuesday morning, a D.C. Circuit Court of Appeals panel handed down a ruling that can have major implications for many people. In the ruling, the judges found that the wording of the Patient Protection and Affordable Care Act (PPACA) only allowed for people who had purchased their health insurance through an exchange that had been set up by an individual state to receive subsidies to help them purchase that insurance.
Later Tuesday, another Circuit Court appeals panel, the 4th U.S. Circuit Court of Appeals, ruled that the language was ambiguous and allowed for the IRS to interpret it as they did. While these contradictory rulings — and the fact that the D.C. court stayed their ruling pending appeal — mean that there is no immediate practical change, most experts agree that this will ultimately be decided by the Supreme Court. If recent history with the court has taught us anything, it is that there is no way to really know how they will rule on this.
For the millions of people in the 36 states that did not set up their own exchanges, this would mean that the plan they signed up for would suddenly become much more expensive due to the loss of the subsidy. An analysis by Avalere Health found that upholding the D.C. Circuit Court ruling could mean that those affected would see their premium prices rise an average of 76 percent without the subsidy. But that’s not all.
Part of what the ruling would void is the individual mandate to have health insurance, in the states where there are no longer subsidies. This makes sense, as you cannot penalize someone for not purchasing insurance if they cannot afford to. But the purpose of the mandate and its accompanying fines was to make sure everyone was covered by insurance — in order to bring down prices for those who need it most, such as people with preexisting conditions. By making sure insurance companies can turn a profit on coverage they sell to healthy people, the law ensures that unhealthy people can buy insurance as well, at the same price. If the healthy people don’t have to buy in, for the insurance companies to remain sustainable and solvent, the price they will need to charge will only go up.
The Halbig ruling would not be as much a loss for the president or the Democratic Party as it would be for the Americans who had relied on the law and its subsidies and will find themselves now priced out of affordable insurance. And even for regular Americans who hadn’t needed the benefits of the PPACA to buy insurance, not being in the states that run their own exchanges would mean that all insurance plans will become more expensive, pricing more people out of the insurance market.
Opponents of the D.C. court’s finding say that it is entirely implausible that the drafters of the PPACA wanted to give states the ability to destroy the law. Proponents of the ruling say that Congress had either wanted to incentivize states to set up their own exchanges or had not expected that as many states would opt out. There is also the legal question of how to address ambiguous language in a statute. That’s all fine. Those are all intellectual arguments, but it does nothing to help the affected parties.
Democrats, under the leadership of President Obama, say that they passed the PPACA to get closer to their goal of universal coverage. Republicans don’t have a problem with the goal but don’t like the way the PPACA attempts to achieve it. But the outcome of this ruling should be acceptable to neither party. Nobody should want fewer people with insurance.
Assuming they choose to hear it, the case will not be decided by the Supreme Court for another year, at least. That should give both parties time to sit down together and work out something to fix this. If the court strikes down the subsidies, the fallout will be a domestic crisis along the lines of the fiscal cliff or the debt ceiling, both of which backed Congress into a corner to pass imperfect solutions due to the constraints of time. If they start now, they can avoid that.
Democrats would probably need to incorporate some conservative reforms into what is President Obama’s signature legislation, and in return, Republicans would have to be open to helping fix it. In short, they would have to do something they haven’t done too much of over the last 10 years: compromise, and work together.
But working together would mean solving a problem which, so long as it remains unsolved, helps each side pander to its base. Resolving this issue would mean sacrificing that political advantage for the good of the American people. In this hyper-political world, that may just be too much to hope for.