November 10, 2014

Supreme Court Will Hear Case Over ACA Subsidies.

The Supreme Court’s decision Friday to hear a case over the health insurance subsidies provided to millions of Americans under the Affordable Care Act generated significant coverage in the major dailies and wire services over the weekend, but little attention on the three network news broadcasts, with ABC and CBS combining for only 30 seconds of reporting. This latest legal challenge is characterized as one of the most significant the law has faced since being passed by Congress. A decision to strike down the subsidies is portrayed as a possible “destabilizing” and “dooming” blow to the ACA.

NBC Nightly News (11/8, story 7, 0:20, Williams) reported the “Supreme Court will take up another challenge” to President Obama’s “signature ObamaCare law. At stake, health insurance coverage for five and a half million low income Americans who bought through federal exchanges and now stand to lose the subsidies that made coverage affordable for them.”

The Washington Post  (11/8, Barnes) reported that the US Supreme Court “announced Friday that it will hear the most serious challenge to the Affordable Care Act since” the court “found it constitutional more than two years ago.” The court accepted King v. Burwell, which is a “lawsuit targeting the federal subsidies that help millions of Americans buy health insurance.”

The CBS Evening News (11/7, story 6, 0:25, Pelley) reported this is the “second challenge to ObamaCare” that the Supreme Court has chosen to hear.” In 2012, “the court upheld the main ObamaCare provision, the one that requires almost all Americans to buy health insurance.”

USA Today  (11/8, Wolf) reported that the ACA faces four separate lawsuits alleging that the subsidies can only be offered to customers of health exchanges run by states. Opponents “mounted the challenges based on the specific language of the law, which states that subsidies, offered in the form of tax credits, will be offered in exchanges ‘established by the state.’” The article notes that 36 states currently operate Federally-administered exchanges.

The New York Times  (11/8, Liptak, Subscription Publication) reported that if the Court strikes down the subsidies, “millions of people receiving subsidies would become ineligible for them, destabilizing and perhaps dooming the law.” The Times further explains that in July, the US Court of Appeals for the Fourth Circuit in Richmond, Virginia ruled against the challengers, saying that the contested phrase was open to multiple interpretations. That same day, the US Court of Appeals for the District of Columbia ruled the other way in a similar case over the subsidies. The Supreme Court “often steps in when federal appeals courts have disagreed,” but the split between the two courts “was wiped out in September when the full District of Columbia Circuit vacated the July ruling and set the case for argument in December.”

The Wall Street Journal  (11/8, Bravin, Radnofsky, Subscription Publication) reports that the Supreme Court’s decision to review the case sets the stage for another major ruling on the ACA next summer. Arguments are likely to begin in March 2015, and a decision is expected before July.

The Los Angeles Times  (11/8, Savage) reported that the Court’s decision on Friday “put President Obama’s healthcare law back into legal peril.” The key vote now, “as it was in 2012, probably will be that of Chief Justice John G. Roberts Jr.” Roberts broke with the conservatives in the previous case to uphold the ACA in a 5-4 decision.

The Los Angeles Times  (11/8, Savage) reported in a similar article that Friday’s announcement from the Court “came as a surprise,” as many legal experts “predicted that the justices would take no action for now because a challenge to the insurance subsides is still pending before the U.S. Court of Appeals for the District of Columbia.”

Bloomberg News  (11/8, Stohr) reported that White House spokesman Josh Earnest defended the Affordable Care Act, stating, “This is a law that is working and has generated significant benefits for working families and small-business owners all across the country, and that’s why you’re going to see a vigorous defense” by the Administration.

Reuters  (11/8, Hurley) reported that Earnest added, “This lawsuit reflects just another partisan attempt to undermine the Affordable Care Act and to strip millions of American families of tax credits that Congress intended for them to have.” The Hill  (11/7, Ferris) also reported Earnest’s remarks.

The Washington Times  (11/10, Howell) reports that the case “could severely dent President Obama’s signature domestic achievement.” Jonathan Adler, “one of the key architects of the legal challenge,” said Friday, “The Supreme Court has the opportunity to reaffirm the principle that the law is what Congress enacts, not what the administration or others wish Congress had enacted with the benefit of hindsight.”

The AP  (11/8, Sherman) reported that “supporters” of the law “were flabbergasted and accused the court of veering into politics.” Ron Pollack, the executive director of Families USA, said, “All the general guidelines that the court traditionally uses” in deciding whether to accept an appeal “are totally absent in this case.” Pollack called the decision “an unusual political act,” but also acknowledged the case over the subsidies is “the most serious existential threat” to the Affordable Care Act. The AP added that the Competitive Enterprise Group is paying for the legal challenges to the healthcare law.

On its website, CNN  (11/8) reported that “the easiest fix” to the law with respect to the current challenge is to change the legislation “to specify that it allows subsidies for coverage purchased through the federal government as well as state exchanges,” but that “would mean reopening the debate in Congress.”

US News & World Report  (11/7) added that ACA enrollees “currently pay $82 per month on average and are given an average subsidy of $264 per month – or $4,700 per year – which is paid for by the government and equates to about $36 billion.”

National Journal  (11/8, Subscription Publication) argued that the Supreme Court’s decision to review the challenge “is a bad sign for the administration.” The Justice Department had asked the Court to hold off on King v. Burwell while a similar case makes its way through the appeals process. Nicholas Bagley, a law professor at the University of Michigan, stated, “The Court’s decision to grant King substantially increases the odds that the government will lose this case.” Likewise, Jon Healey wrote in his column for the Los Angeles Times  (11/8) that “the fact that the court took the case against the administration’s advice and before the D.C. Circuit has acted is a sign of trouble for the ACA.”

Jennifer Rubin wrote in the Washington Post  (11/9, Rubin) “Right Turn” blog that “conservatives hope the case will afford Chief Justice John Roberts, who essentially invented an attenuated tax argument to preserve Obamacare the first time, a chance to get it right.” Noah Feldman wrote in a Bloomberg View  (11/7) piece that the other conservative justices “have decided to put Roberts to the test,” and will “not let him get away without standing up and being counted on Obamacare once again.”

The Daily Caller  (11/7, Hurtubise) reported that judges on the DC Circuit Court are expected to find the subsidies legal when they rule on Halbig v. Burwell in December.

In another article, the Daily Caller  (11/7, Hurtubise) examined “a couple of potential ways states could try to get their subsidies back” if they are struck down by the Court. States could work with the IRS to develop another executive “workaround,” for example, or states could build their own exchanges. With a GOP-controlled Congress, however, “there’s almost no hope” that Congress would amend the ACA to make subsidies available everywhere.

Bloomberg News  (11/8, Wayne, Armstrong) reported that if the Court strikes down the subsidies, the Administration would likely seek to help set up more state exchanges. Law professor Nicholas Bagley stated, “It would smooth the path toward the establishment of state exchanges if HHS could make it cheap, and offering as the back-end IT infrastructure for a state-established exchange would potentially be very cheap.”

But in his piece for Bloomberg  (11/8), David Weigel wrote that what “worries liberals” about the case “is that the record number of Republican state legislators elected this week would use a King decision to destroy Obamacare.” Indeed, of the 36 states that declined to set up their own health exchanges, only seven will have Democratic governors in 2015.

The Athens (GA) Banner-Herald  (11/9) reported that the Supreme Court’s ultimate ruling in the case “could wind up having a huge impact in Georgia.” This year, the Georgia General Assembly “passed legislation that bars the state from running an ACA exchange.”

Arit John, in a piece for Bloomberg  (11/8), explored “four scenarios” about how a Republican Congress might act if the subsidies are ruled illegal.

Greg Sargent wrote in the Washington Post  (11/7, Sargent) “Plum Line” blog that if the subsidies are ruled illegal, it’s “very possible” that GOP lawmakers would refuse to fix the law. However, they would face intense political pressure to “keep the subsidies flowing to their constituents,” and “at least the true consequences of their health care stance would now be nakedly apparent.” Similarly, Christopher Flavelle argues in his piece for Bloomberg View  (11/7) that if the subsidies are invalidated and Republican governors and state legislators opt out of setting up state exchanges, voters will respond by voting “differently next time.”

The Washington Post  (11/7, Adler) reported in its “Volokh Conspiracy” blog that the Court’s decision to hear the case does not necessarily mean the justices are skeptical of the Administration’s arguments. Though the DC Circuit’s decision to rehear Halbig v. Burwell vacated the original ruling against the subsidies, the Supreme Court “is aware that this is a question upon which courts are divided.”

The New York Times  (11/7, Sanger-Katz, Subscription Publication) “The Upshot” blog reported that “it’s worth remembering all of the parts of the health law that are not under attack by this case,” such as Medicaid expansion and regulations on insurance companies. A ruling against the Administration in King v. Burwell “wouldn’t take the health law off the books.”

The Wall Street Journal  (11/8, Radnofsky, Subscription Publication) reported that eleven states that would be affected if the Court upholds the challenge told a separate court earlier this week that they assumed residents could still receive subsidies even if they relied on a Federally-administered exchange. The states – Arkansas, Delaware, Illinois, Iowa, Maine, Mississippi, New Hampshire, New Mexico, North Carolina, Pennsylvania and Virginia – filed a court brief in a separate appeal in the DC Circuit Court that said they “elected to forgo establishing their own exchange under the ACA with the understanding that relying on a federally facilitated exchange would not harm state citizens or interfere with state insurance market.”

Congressional Quarterly  (11/8, Subscription Publication) reported that “analysts say they do not expect Supreme Court consideration of the case to deter signups,” though a ruling invalidating the subsidies “could devastate the exchange market going into 2016.”

Bloomberg News  (11/8, Gilblom) reported that US hospital owners “including Community Health Systems Inc. (CYH) may suffer a significant blow if the Supreme Court takes away subsidies that some Americans get to buy health insurance under the Affordable Care Act.” After the Court’s decision to hear the case was announced Friday, shares in Community Health dropped 5.5 percent to $47.81.

Additional Commentary. The New York Times  (11/8, Subscription Publication) editorialized that a ruling for the challengers would “eliminate essential health care subsidies” for more than four million “lower-income Americans, based on a contorted reading of four words.” The Times characterizes the ACA as an “unprecedented achievement in social policy” which has “saved, many lives.”

The Wall Street Journal  (11/8, Subscription Publication) argued in an editorial that the Supreme Court is right to try and resolve the matter as soon as possible, considering the legal uncertainty surrounding implementation of the ACA.

In his column for the New York Times  (11/10, Krugman, Subscription Publication), Paul Krugman laments that the Supreme Court is “willing to hear a case claiming that the wording of one clause in the Affordable Care Act sets drastic limits on subsidies to Americans who buy health insurance.” He says judges who support this “cruel absurdity” are “corrupt, willing to pervert the law to serve political masters.”

In his column for the Los Angeles Times  (11/8), Michael Hiltzik said that the “Halbig/King argument makes no sense whatsoever in the context of the Affordable Care Act,” as it “posits that Congress deliberately aimed to punish states that didn’t establish insurance exchanges.”

Writing for the New York Times  (11/7, Subscription Publication) “The Upshot” blog, Josh Barro argued that even if subsidies are struck down and health insurance becomes more unaffordable for many Americans, the outcome “would not necessarily be an unsustainable one.” Barro compared the ACA system to New York before 2014, which also had “community rating and guaranteed issue” but not subsidies or an individual mandate. While the policy created high premiums and left many people uninsured, “it was not unsustainable.”

In her piece for Bloomberg View  (11/7), Megan McArdle said that the Administration is entering this legal battle “with a significantly weaker hand than it had even a few months ago,” given that the GOP has taken over Congress and the ACA remains unpopular.

In his Tampa (FL) Tribune  (11/9) column, Tom Jackson argues that the language in the ACA was rendered as it was because “Obamacare’s drafters were eager to use the act, and the redistributed taxpayer billions it dangled, to further break resistant states to Washington’s saddle.”


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