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Future of Affordable Care Act murky once again

Round 2 at the Supreme Court coming
Round 2 at the Supreme Court coming
Official White House Photo by Chuck Kennedy

The split decisions on the Affordable Care Act (ACA) subsidies by two separate appeals court rulings on Tuesday means that a second battle on the Supreme Court is likely. Will opponents get a measure of revenge or will Lucy yank the football out from under Charlie Brown again?

There are several keys to the case but the most important one is these five words: "exchange established by the state." These words provide the basis to the lawsuit by opponents of the law. Under the ACA, a formula is established for federal subsidies by determining the tax credits people are eligible for. These subsidies may be paid to people only if the insurance is bought through the state exchanges. The IRS then issued after the law was passed making the subsidies available for people on the federal exchange which opponents contend was illegal. Supporters claim the writers of the law made a simple drafting error and the IRS did nothing wrong.

At first glance, it appears opponents have the upper hand and supporters are simply making excuses. But there is another piece of information that is important to note. The ACA required states to create exchanges for their residents to buy health insurance, and then said that the federal government will build the exchange if a state refuses. The people writing the law probably anticipated that some states would refuse to go along and the federal government would have to pick up the slack. Limiting subsidies to state-created exchanges only did not appear to be part of the plan though definitive proof is difficult to establish.

Should the Supreme Court decide to overturn the ACA subsidies, there will be significant consequences. The federal government operates ACA exchanges in 36 states while the other states established their own exchanges. Millions of people depend on the subsidies in order to afford purchase health insurance on the federal exchanges. Should the Supreme Court strike down the subsidies, most will find not be able to make the payments. There will also be severe consequences to both ACA mandates as well. The individual mandate would be crippled since there would be little money to collect and the employer mandate would be eliminated in the states with federal exchanges since businesses would no longer have to offer insurance to workers or pay a tax penalty.

What will happen assuming Obamacare eventually reaches the Supreme Court? Tom Goldstein, publisher of the influential Supreme Court of the United States blog (SCOTUSblog), predicts the administration will prevail narrowly once again, likely in a 5-4 decision. It should be noted that Goldstein was one of the people who correctly predicted how the Supreme Court would rule two years ago. Most experts share his viewpoint so the last thing Republicans should be doing is high-fiving and thinking Chief Justice John Roberts will do them a solid after blindsiding them two years ago when the Court first upheld ACA by ruling that the individual mandate was a tax. There is nothing specific in the law stating this but the Court found some leeway anyway.

No one can say for sure how the Court will rule but expecting the worst is only reasonable. Do not be surprised if Roberts aka Lucy pulls the ball away once more.

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