It was the biggest surprise to reporters who follow health care: Kennedy’s persistent questioning on whether state-based exchanges are “coercive.” The argument is that under Obamacare, the federal government is imposing mandates and regulations on a state’s insurance market, mandates that are unworkable if they aren’t accompanied by billions in subsidies. Said Kennedy:
Let me say that from the dynamics of Federalism, it does seem to me that there is something very powerful to the point that…the states are being told either create your own exchange, or we’ll send your insurance market into a death spiral. We’ll have people pay mandated taxes which [they] will not get any credit on—on the subsidies. The cost of insurance will be sky-high, but this is not coercion. It seems to me that under your argument, perhaps you will prevail in the plain words of the statute, [but] there’s a serious constitutional problem if we adopt your argument.
A Yale Law professor named Abbe Gluck has been the main proponent of this “federalist” argument. In January, Gluck co-authored an amicus brief filed before the Supreme Court making the case that the challengers’ “interpretation would result in a significant intrusion on the usual balance between the state and federal governments.”
Gluck expounded on her theory in a Politico op-ed. If Obamacare conditioned exchange subsidies on the construction of state exchanges, wrote Gluck, that would be unfairly punitive against the states, decrying “the penalty the challengers would foist on the states—the loss of the subsidies and drastic consequences that would go with it.”
Gluck admits that she and her fellow Obamacare advocates are susceptible to being called “fair-weather federalists,” or as the kids say these days, “trolls.” She’s right.