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On the Third Hand: Halbig and King

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A swing-voter justice on the U.S. Supreme Court could still hold his or her judicial nose long enough to let the U.S. Department of Health and Human Services (HHS) keep running the public health insurance exchange system pretty much as “planned.”

(With, obviously, the word “planned” used broadly enough to refer both to something “planned” in the traditional sense and something “fastened together with duct tape at the last minute, at 4:30 a.m. Eastern Time, by interns — really great interns — who are hopped up on energy drinks.)

A three-judge panel at the D.C. Circuit Court of Appeals today ruled 2-1, in Halbig vs. Burwell, that the Patient Protection and Affordable Care Act (PPACA) does not directly give the Obama administration permission to provide PPACA premium subsidies for moderate-income consumers who buy private qualified health plan (QHP) coverage through the public exchanges run by HHS. Therefore, the D.C. Circuit said, the Obama administration can’t do that, because it’s not in the law.

The three-judge panel at the 4th Circuit Court of Appeals ruled, two hours later, 3-0, in King vs. Burwell, that the HHS-run exchanges can offer premium subsidies. PPACA is much a mess, the 4th Circuit held, and the legislative history so scanty, that it’s not clear what Congress meant about the tax credit when it drafted the law. But, the 4th Circuit said, the law does give the HHS secretary the authority to clear up ambiguities, and the Supreme Court has ruled in the best that, when a law is open to interpretation, the courts ought to let the agency implementing it interpret it, so, the country should let the HHS-run exchanges offer PPACA subsidies.

If the Supreme Court ends up siding with the D.C. Circuit, and blocks the use of PPACA premium subsidies at the HHS-run exchanges, what then?

One thought is: Any state that’s even somewhat open to making peace with HHS, even just for the sake of letting residents get QHP subsidy money, will probably be able to find some way to call its exchange a state-based exchange. The universe of states that want the subsidy money might be a lot bigger than the universe of states that want to set up enrollment systems.

A second thought is that it will be interesting to see what happens when Republican-dominated governments in light Red states and swing states yank premium subsidies away from millions of QHP holders. Will those state governments turn hundreds of thousands of previously politically inert Democrats and independents into committed voters who want to see QHP subsidy opponents’ heads on spikes?

Another question is whether HHS will make the PPACA restrictions on use of personal health information in the pricing and sale of health insurance stick in states that can’t offer PPACA coverage subsidies. Maybe not.

Once the world settles down, we could end up with a nation of PPACA states and non-PPACA. In the Blue and Purple PPACA states, unsubsidized coverage will be expensive, but poor people and sick people will have easy access to coverage — possibly thanks to taxes paid by taxpayers throughout the country. 

Residents of Red non-PPACA states may have access to cheap private coverage if they are young and healthy, but little access to Medicaid, and no access to affordable private coverage if they are broke or sick. Or, if the PPACA underwriting rules apply in states without either Medicaid expansion or QHP subsidies, residents may have no access whatsoever to affordable coverage. The only people who will have any health insurance in those states may be rich people.

The trend for decades has been for vigorous young workers to move from Blue Rust Belt states to Red Sunbelt states. If Blue states become the states where people have access to health insurance (even expensive, rickety, annoying health insurance), maybe that trend will reverse, and Red state workers — especially those with any chronic health problems — will flood into the Blue states. Or, if they stay in their states, they may ask why the people across the state line can go to the doctor and they can’t.

On the one hand, from the perspective of anyone who is open-minded enough to want any PPACA that exists to be the best PPACA it can be, the enemy here is the very liberal Democrats who pushed President Obama to shift to an entirely government-run health care system when he was first elected. If those very liberal Democrats had let Obama and congressional leaders propose a bill that could have gotten past moderate Democrats in the Senate from the start, Obama might have been able to sign a version of PPACA that was flawed but that had least gone through proofreading.

As it was, we’re lucky the final version of the bill didn’t include a provision outlawing chocolate. It’s not clear that anyone would have caught that provision if it had been in the text.

On the other hand, whatever the problems with PPACA itself might be, the idea that Blue state residents might get whatever benefits there are to be had from PPACA, and Red state residents would help pay for those benefits without enjoying the benefits, seems strange.

On the third hand, the irony could be that, if this goes on private health insurers will continue to operate with some headaches, but pretty well, in the Blue PPACA states, and that the Red non-PPACA states will eventually have no choice but to cope with the chaos in their health insurance markets by offering Medicaid for all.


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