State Versus Federal Health Insurance Exchanges - ObamaCare's Double Edged Sword

From RTE post dated October 28, 2012 (two & a half years after ObamaCare was passed) – "Now the ObamaCare law may have taken another turn during the past few days.  The October 14 posting on RTE mentioned that 'Oklahoma has filed a new legal challenge re employers being fined in Oklahoma where they – & several other states - do not intend to set up & run their own health insurance exchanges.'  This idea of the Oklahoma AG is starting to get legs - I read several investigative reports last week that concluded the IRS does not have the authority under ObamaCare to assess penalties against employers in states where the state itself did not set up the specified health insurance exchange.  It is estimated that about 30 states will not set up the health insurance exchanges thereby leaving it up to the federal government (Secretary of HHS – Kathleen Sibelius) to do so in accordance with the law.  The rub & the Oklahoma AG's claim is that the tax assessments by the IRS are not allowed against employers who do not furnish health insurance to their employees unless the states set up the health insurance exchanges.  This interpretation could affect 12 million people including 250,000 in Oklahoma.  The deadline for states establishing health insurance exchanges, or not, is November 16.  Sixteen states (led by California) & DC have already established health insurance exchanges & seven states (led by Texas) have said they will not establish health insurance exchanges.  The stage is set for the next round of legalities."

 

***

 

And the start of the next round of ObamaCare legalities began last week with a 2 to 1 ruling by a three judge panel of the U.S. Court of Appeals for the District of Columbia Circuit that found consumers in states with federally run health insurance exchanges could not receive subsidy support for their premiums.  Two hours later another three judge panel – this time for the U.S. Court of Appeals for the Fourth Circuit in Richmond – unanimously came to the opposite conclusion.

 

The 7th & 10th (the one that Oklahoma is in – see above) Circuit Courts are also hearing similar cases involving whether or not a health insurance exchange had to be set up by a state – not the federal government for that state - in order for a policy holder to receive a subsidy to help pay for the policy premium.

 

Now it cannot be clearer that the statutory language of the ObamaCare bill says that in order for a policy holder to receive a subsidy support for their premiums the policy must have been obtained on a health insurance exchange established by the state – not the federal government.  BO says that regardless of what the statute says the intent of Congress was for everyone to get the subsidies. 

 

Just check the wording in the bill to find out the first point is literally true & lord knows BO's point is true as far as it goes - BO & the Democrats intentions are for every "have not" to receive every subsidy imaginable @ taxpayers expense.

 

The problem between the above two positions in tension for BO is that it was Congress's (& his) intention to encourage every governor to get behind the ObamaCare legislation by offering federal tax credit subsidies to residents of states that operated their own health insurance exchanges – not health insurance exchanges operated by the federal government. Accordingly, both the statutory language & the narrow intent of the writers of the legislation favor upholding the DC Circuit Court's ruling.  In short the bill means what the words say.

 

But enter the political into the legislative analysis.  So far six judges have heard the case & the result is 4 to 2 in favor of BO (2 Republicans versus 1 Democrat in DC & 3 Democrats, including two BO appointees, versus no Republicans in Richmond).  BO's plan is to ask the entire DC Circuit Court to hear the case – BO packed this court with Democrat judges (seven of the eleven judges are Democrats) after the Democrat controlled Senate broke the decades long Senate filibuster rule in 2013 to little notice while most people were more interested in asking BO to concentrate on improving our economy, working on job creation, & more recently stopping the flow of illegal aliens across our southern border as if BO had any interest in any of this whatsoever.  The sooner people learn that BO is not pursuing the same goals as every other president in our history the better.

 

But in a vivid example of some elected representatives being interested in things other than the general Welfare of the United States I wonder why we need a court case @ any level to determine what Congress wrote or what Congress intended by the voluminous ObamaCare legislation.   Since Congress is still there we could just ask them – although it would not be the same Congress as in March 2010 when the legislation was passed.  We could ask individual members what they meant when they voted for the legislation – this might get embarrassing. 

 

If everyone wanted to help – which they don't - we could take the benefit of the past four years experience of painfully finding out what is in the bill & simply updating the legislation to take into account all that we have learned – including repealing it.  Of course this will never fly until noon on January 20, 2017 @ the earliest.

 

Since asking Congress isn't going to answer the question the next best or even better thing is to ask the people who actually wrote the legislation.  MIT Professor Jonathan Gruber was one of the main authors of the ObamaCare legislation.  Professor Gruber made numerous appearances on TV over the past four years explaining & defending ObamaCare. 

 

Click here to see & hear Professor Gruber answer a general question in January 2012 about whether or not the federal government will run health insurance exchanges if the states don't – he went out of his way in answering the question to say "if you're a state & you don't set up an exchange, that means your citizens don't get their tax credits. . . I hope that that's a blatant enough political reality that states will get their act together & realize there are billions of dollars @ stake here in setting up these exchanges."  Start @ 31.25 on the video – it takes less than a minute. 

 

The importance of these judicial decisions, including the two that have not been finalized, is that there is much more @ stake for ObamaCare & the nation than whether or not people are going to get health insurance policies that are substantially subsidized by the American taxpayer.  The issue regarding whether or not subsidies are part of a health insurance exchange can trigger penalties against employers who do not purchase the mandated ObamaCare level of coverage – the tax penalty for the delayed ObamaCare provision known as the employer mandate does not come into play until an employee does not get specified coverage through his employer & goes on an exchange & receives federal subsidies for purchasing insurance.  If the DC Circuit Court ruling holds there will be no subsidies in the 36 states that did not set up their own exchanges meaning there will be no penalties against businesses who ignore ObamaCare in such states.  In turn employees in this scenario will either pay the full unsubsidized healthcare insurance premiums or will go without healthcare insurance & accordingly will be charged a tax penalty for not having the mandated healthcare insurance – either way people in these states will have a much higher financial burden than people in states that did set up their own health insurance exchanges.

 

Now this appears to have all the ingredients necessary to unravel ObamaCare – & it might.

 

To opponents of ObamaCare on the surface this all sounds good – but stop & think what pressure this puts on governors in the thirty six states who opted out of running their own state exchanges.  What will their constituents (i.e., electorate) think especially after their political opponents point out that the average size of a federal subsidy in 2015 is estimated by the CBO to be $4,250 meaning that the federal government pays three quarters of the health insurance premium – right in line with the ratio paid by the federal government for Medicare Parts B & D.  There are already signs that some states are folding under this pressure – Idaho, Nevada, & Oregon have each taken the position that their exchanges are state-based no matter who runs them. 

 

So we are about to find out who would not be interested in obtaining health insurance coverage @ 25 cents on the dollar – like someone who has the sense to realize that all of the entitlements add up to a destruction of our way of life.