If the Supreme Court decides against the Obama administration in the case, leaders in Congress are indeed determined to pass legislation to protect coverage for an estimated six million people. ObamaCare has so distorted the market for individually-purchased and small group health insurance that Congress has little choice but to throw them a safety net.
New Report Shows States Had Serious Questions about Obamacare Tax Credits in 2011 | Competitive Enterprise InstituteApril 16, 2015
Today the Competitive Enterprise Institute (CEI) released a report by finance expert Scot Vorse that shows many states knew as early as 2011 that they might not receive tax credits if they opted out of establishing a state-based health insurance exchange. Whether nonparticipating states had adequate knowledge that they were putting their Obamacare subsidies at risk is a critical question in CEI’s Supreme Court case, King v. Burwell.
Vorse obtained emails related to a January 2012 letter sent by seven states to the U.S. Department of Health and Human Services (HHS). While Obamacare supporters have dismissed this letter as a “spoof,” these state emails show the letter was a carefully crafted and coordinated effort by the states to get detailed information about the exchanges from HHS.
“Notably, the states explicitly asked HHS to explain what authority it had to administer tax credits on federally established exchanges,” Vorse writes.
University of Miami Business Law Review.
Full text: http://business-law-review.law.miami.edu/wp-content/uploads/2015/04/Miller-Unfair-Coercion-or-Greater-Deference.pdf
If the insurer offers no other plan in a state’s individual market, then the law bars the insurer for five years from offering individual market coverage in that state. Should an insurer actually exit the market in this way, it must give those enrolled in the plan 180 days (six months) notice, and anyone losing coverage would be allowed to choose replacement coverage from among the other plans offered by the other insurers in that state’s individual market—regardless of whether those plans are offered inside or outside the exchange.
The bottom line? Anyone affected by the Court’s ruling will have options for maintaining coverage or choosing a different plan.
Prior to the ACA most states had little or no restrictions on insurance rates taking account of enrollees’ health risks. In the 1990s a small number of states imposed community rating and guaranteed issue in their health insurance markets, as the ACA has done, but without any subsidies, exactly the same situation that will result on the federal exchanges from a plaintiffs’ victory in King v. Burwell. It was widely predicted these states would experience an adverse selection death spiral. A 1999 National Bureau of Economic Research (NBER) paper by Thomas Buchmueller and John Dinardo compared New York, which had imposed community rating and guaranteed issue, with neighboring states. They “found no evidence for the conventional wisdom that the imposition of pure community rating tends to an adverse selection death spiral.” Similarly, another 2006 NBER paper by Bradley Herring and Mark V. Pauly compared states with community rating and guaranteed issue to states with no such regulations. They found a small increase in the number of uninsured, but did “not observe a strong positive relationship between risk status and the likelihood of being covered, that would be consistent with so-called death spirals.”
Everything in the legislative history that sheds light on what Congress intended supports the plain meaning of the language limiting premium subsidies to those who obtain coverage “through an Exchange established by the State.”
- The lead author of the ACA, then-Senate Finance Committee Chairman Max Baucus, D-Mont., had proposed — and even gotten Congress to enact — other health-insurance tax credits and subsidies that were conditioned on states taking certain actions.
- Senate Democrats similarly considered letting individual states opt out of the Democrats’ cherished “public option.”
- Congressional Democrats considered other bills in 2009 that explicitly did authorize subsidies in federal exchanges. But they discarded that language in favor of the ACA’s approach.
- More than a dozen Senate Democrats championed a bill that explicitly conditioned exchange subsidies on states implementing that bill’s employer mandate. Those senators discarded that condition in favor of the ACA’s approach of explicitly conditioning premium subsidies on states implementing exchanges.
- Eleven House Democrats from Texas recognized and even complained that states could prevent their residents from receiving “any benefit” under the ACA, including premium subsidies, simply by refusing to establish exchanges. In early January 2010, they pleaded for House Speaker Nancy Pelosi and President Barack Obama to support one of the bills that explicitly authorized subsidies in federal exchanges. Yet all 11 of them ended up voting for the ACA, despite their reservations.
- One of the ACA’s architects and a paid consultant to the Obama administration, Massachusetts Institute of Technology health economist Jonathan Gruber, repeatedly described the ACA by saying: “If you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits.”
Rep. Paul Ryan urged state lawmakers to resist setting up state insurance exchanges if the Supreme Court rules that key parts of the Affordable Care Act can only continue if they do so.
“Oh God, no…The last thing anybody in my opinion would want to do, even if you are not a conservative, is consign your state to this law,” the Wisconsin Republican told state legislators Thursday during a conference call organized by the Foundation for Government Accountability, a conservative think-tank. The foundation provided a recording of the call.