THCB

King vs. Burwell: Chalk One Up For Common Sense

Screen Shot 2015-06-26 at 8.33.49 AMThe Supreme Court yesterday decided that Congress meant what it said when it enacted the Affordable Care Act (ACA). The ACA requires people in all 50 states to carry health insurance and provided tax credits to help them afford it. To have offered such credits only in the dozen states that set up their own exchanges would have been cruel and unsustainable because premiums for many people would have been unaffordable.

But the law said that such credits could be paid in exchanges ‘established by a state,’ which led some to claim that the credits could not be paid to people enrolled by the federally operated exchange. In his opinion, Chief Justice Roberts euphemistically calls that wording ‘inartful.’ Six Supreme Court justices decided that, read in its entirety, the law provides tax credits in every state, whether the state manages the exchange itself or lets the federal government do it for them.

That decision is unsurprising. More surprising is that the Court agreed to hear the case. When it did so, cases on the same issue were making their ways through four federal circuits. In only one of the four circuits was there a standing decision, and it found that tax credits were available everywhere.

It is customary for the Supreme Court to wait to take a case until action in lower courts is complete or two circuits have disagreed. In this situation, the justices, eyeing the electoral calendar, may have preferred to hear the case sooner rather than later to avoid confronting it in the middle of a presidential election.

Whatever the Court’s motives for taking the case, their willingness to hear the case caused supporters of the Affordable Care Act enormous unease. Were the more conservative members of the Court poised to accept an interpretation of the law that ACA supporters found ridiculous but that inartful legislative drafting gave the gloss of plausibility? Judicial demeanor at oral argument was not comforting. A 5-4 decision disallowing payment of tax credits seemed ominously plausible.

Future Challenges for the ACA

The Court’s 6-3 decision ended those fears. The existential threat to health reform from litigation is over. But efforts to undo the Affordable Care Act are not at an end. They will continue in the political sphere. And that is where they should be. ACA opponents know that there is little chance for them to roll back the Affordable Care Act in any fundamental way as long as a Democrat is in the White House. To dismantle the law, they must win the presidency in 2016.

But winning the presidency will not be enough. It would be mid 2017 before ACA opponents could draft and enact legislation to curb the Affordable Care Act and months more before it could take effect. To borrow a metaphor from the military, even if those opposed to the ACA win the presidency, they will have to deal with ‘facts on the ground.’

Well over 30 million Americans will be receiving health insurance under the Affordable Care Act. That will include people who can afford health insurance because of the tax credits the Supreme Court affirmed today. It will include millions more insured through Medicaid in the steadily growing number of states that have agreed to extend Medicaid coverage. It will include the young adult children covered under parental plans because the ACA requires this option.

Insurance companies will have millions more customers because of the ACA. Hospitals will fill more beds because previously uninsured people will be able to afford care and will have fewer unpaid bills generated by people who were uninsured but the hospitals had to admit under previous law. Drug companies and device manufacturers will be enjoying increased sales because of the ACA.

The elderly will have better drug coverage because the ACA has eliminated the notorious ‘donut hole’—the drug expenditures that Medicare previously did not cover.

Those facts will discourage any frontal assault on the ACA, particularly if the rate of increase of health spending remains as well controlled as it has been for the past seven years.

Of course, differences between supporters and opponents of the ACA will not vanish. But those differences will not preclude constructive legislation. Beginning in 2017, the ACA gives states, an opening to propose alternative ways of achieving the goals of the Affordable Care Act, alone on in groups, by alternative means. The law authorizes the president to approve such waivers if they serve the goals of the law. The United States is large and diverse. Use of this authority may help diffuse the bitter acrimony surrounding Obamacare, as my colleague, Stuart Butler, has suggested. At the same time, Obamacare supporters have their own list of changes that they believe would improve the law. At the top of the list is fixing the ‘family glitch,’ a drafting error that unintentionally deprives many families of access to the insurance exchanges and to tax credits that would make insurance affordable.

As Chief Justice Roberts wrote near the end of his opinion of the Court, “In a democracy, the power to make the law rests with those chosen by the people….Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.” The Supreme Court decision assuring that tax credits are available in all states spares the nation chaos and turmoil. It returns the debate about health care policy to the political arena where it belongs. In so doing, it brings a bit closer the time when the two parties may find it in their interest to sit down and deal with the twin realities of the Affordable Care Act: it is imperfect legislation that needs fixing, and it is decidedly here to stay.

Henry J. Aaron is a Senior Fellow, Economic Studies at the Brookings Institution.

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24 replies »

  1. We wouldn’t want such a thing. Employer sponsored health insurance due to unequal tax ramifications was one of the worst things in our system preventing a better system from developing.

  2. “One example is that the ACA demonstrated that employer sponsored healthcare was not a necessity.”

    Hooray! Why would we want it to be a “necessity”?

  3. “What would be more helpful than subsidies to enable health care access?”

    I have no objection to subsidies. I do have objections to crowding out the poorest under Medicaid by those slightly more fortunate who previously might have had good insurance from their employer. I also object to high costs that are unnecessary. Why do you think so many people eligible for the subsidies haven’t signed up for the ACA. Do you think they might perceive higher costs than value?

    “Yes, the off the cliff subsidy determination is unfair”

    We agree, but the ACA was supposed to solve that problem and many others. Instead it concentrated on control rather than care.

    “How are new Medicaid crowding our old Medicaid?”

    The ACA really didn’t satisfy many of the most important problems. It did, however, create a lot of new ones. What provisions did the ACA create to make Medicaid accessible once the numbers in Medicaid increased? What did the ACA do to improve Medicaid?

    “But how would you “improve” without dismantling ACA?”

    That is the problem. The ACA was so poorly written that it is near impossible to make it into a good program without dismantling it.

    There were some approaches by the ACA that had benefit, though the way the ACA carried those approaches out was managed very poorly. One example is that the ACA demonstrated that employer sponsored healthcare was not a necessity.

  4. You say: “F**K OFF and DIE!!!”

    The Supreme Court’s interpretation: “Nice to see you, have a nice day!”

  5. “I believe that the ACA is more harmful to the poor than helpful.”

    What would be more helpful than subsidies to enable health care access?

    “you find that the amounts needing to be paid by those just above the poorest groups is perceived as too expensive and many are not signing up.”

    Yes, the off the cliff subsidy determination is unfair – how would you fix it other than getting rid of ACA altogether?

    “That means the slightly better off (new Medicaid patient) will crowd out the poorer and and more needy (older Medicaid patients).”

    How are new Medicaid crowding our old Medicaid? Because Medicaid pays so little to docs there is little incentive to take on more patients?

    “Then if you look at the health care offered by Medicaid itself (Oregon Study) you recognize that instead of adding to Medicaid the program needs to be improved.”

    Medicaid needs to be dismantled and rolled into Medicare – than we’d all get same treatment access.

    But how would you “improve” without dismantling ACA?

  6. I leave to others to judge which of us is what. Your insults have zero effect on me. But, by all means, have the last word. I move on.

  7. Peter, you must recognize that from an humanitarian viewpoint we all are looking towards a very similar endpoint. It is the ideology that gets in the way. I believe that the ACA is more harmful to the poor than helpful. You disagree.

    The next step is a logical argument based upon real or raw data and not the contrived data so often presented by the left and to a lesser extent by the right.

    You talk about those that have pre-existing disease. We both agree that is a problem that needs to be managed. How did the Obama administration handle pre-existing disease early in the course of the ACA. It shut down the program and used the money to advertise the ACA. So much for the humanitarian side of Obama.

    You talk about subsidies. If you actually tally up the costs for different incomes (raw data rather than abstract data that you do not understand) you find that the amounts needing to be paid by those just above the poorest groups is perceived as too expensive and many are not signing up. If you take a look at the Medicaid side of the equation where most of the signups occur and add up how much additional access for Medicaid was created by the ACA you will find very little. That means the slightly better off (new Medicaid patient) will crowd out the poorer and and more needy (older Medicaid patients). Then if you look at the health care offered by Medicaid itself (Oregon Study) you recognize that instead of adding to Medicaid the program needs to be improved.

    What the ACA is,is the fulfillment of a dream, but dreams are not real and the ACA cannot fulfill those dreamy needs. Instead of living in a dream world one should live in the real world and instead of treating dreams focus on one’s worst nightmares such as pre-existing disease, extreme poverty, lack of jobs, lack of adequate education. Solve those problems and that will make the world a better place. Attempting to rule with a one shoe fits all approach only dilutes one’s efforts among a greater population and interferes with societies abilities to solve problems.

  8. Even a broken clock is right twice a day.

    Such bravado for essentially a 1:3 chance. The only two significant variables were Kennedy and Roberts. Being right 1:3 times isn’t a great record. If you were a physician in practice you would be considered a hazard, one that needed to be removed from the profession.

  9. “6-3” You have come very late to the game. Everyone knows the decision was 6-3. If that is your point then you must be a parrot repeating what has already been said.

  10. “I am more concerned with the promises that cannot be filled and families that are being robbed by big government.”

    Would those families be the ones getting subsidies to finally be able to afford health care? Or maybe it’s the ones that don’t have to worry about pre-exist, or maybe the ones with no lifetime max.

    Which ones are being “robbed” Allan?

  11. And what is explicilty written in ACA Section 1321 (federal HIX authority in the wake of state inaction) supplants and trumps the 4 words of 1311(d). But, always nice to have your condescension. Charming.

    Section 1321(c) FAILURE TO ESTABLISH EXCHANGE OR IMPLEMENT REQUIREMENTS.—
    (1) IN GENERAL.—If—
    (A) a State is not an electing State under subsection (b); or
    (B) the Secretary determines, on or before January 1, 2013, that an electing State—
    (i) will not have any required Exchange operational by January 1, 2014; or
    (ii) has not taken the actions the Secretary determines necessary to implement—
    (I) the other requirements set forth in the standards under subsection (a); or
    (II) the requirements set forth in subtitles A and C and the amendments made by such subtitles; the Secretary shall (directly or through agreement with a not- for-profit entity) establish and operate such Exchange within the State and the Secretary shall take such actions as are necessary to implement such other requirements.
    Page 85

    Scalia, obsessed with the 4 ostensible “got’cha” words of 1311(d), never mentions this. Wonder why?

  12. Apparently you require some legal education. What is written in a contract is what exists, not what you later wish existed. For the most part that is how I believe the Supreme Court should function whether or not I agree with the law being heard by them.

    It is these inconsistent utterances that cause problems and from what I have seen you are most inconsistent.

  13. Live with it? I don’t quite know what you mean. The Supremes have ruled and the law is the law. That the Supremes are willing to change words and rewrite legislation instead of sending it back to Congress is a problem, but there is nothing I can do about that.

    I don’t have to live with it in the direct sense. I can afford whatever care I want. No tax will affect my well being. I have enough doctors in the family to advise me of what I might need so I will do just fine.

    I am more concerned with the promises that cannot be filled and families that are being robbed by big government. If ObamaCare actually did what Obama promised even if I disagreed with the bill on Constitutional grounds I might have been quite satisfied. But, we know that what was promised was nothing more than a lie. We, or at least some of us, already understand many of the costs of the bill in the future whether it be financial, personal health or loss of freedom.

    I’ll let you deal with the penny ante stuff.

  14. Live with it Allan, the Supreme Court has ruled. If the wording was so important Repugs would have offered to fix, but all they want to do is tear down without a plan of their own.

  15. The article you provided is very lengthy
    Could you summarize his concern about fragmented pools
    It takes about 1,000 lives to make a pool credible for actuarial purposes
    Rather than the size of the pool it is just as important to split the risk between 2 distinct insurers
    One insurer would focus on frequency of claims which are usually amounts up to $25,000
    The other insurer would focus on severity of claims
    Don Levit

  16. “The Supreme Court yesterday decided that Congress meant what it said when it enacted the Affordable Care Act (ACA). The ACA requires people in all 50 states to carry health insurance and provided tax credits to help them afford it.”

    Justice Roberts said: “the Act defines “State” to mean “each of the 50 States and the District of Columbia”—a definition that does not include the Federal Government. 42 U. S. C. §18024(d).”

    Reading comprehension a necessity. Robert’s argument doesn’t disagree that the word State in “established by the State” referred to the 50 states. It appears he feels it is the Supreme Court’s job to actually write the bill for Congress since Congress couldn’t accomplish the feat by themselves.

  17. Not really, though its alluded to in the book I cited “The U.S. Health Care Paradox.” I will pose the question to Einer Elhauge.

  18. Bobby, have you researched wether systems such as Canada’s or France’s or Germany’s are less fragmented?

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