Obamacare in 2015

Tevi Troy says that 2015 is shaping up as Obamacare’s worst year. That’s quite a statement, considering how bad a year it had in 2014 — roll-out problems, false claims of 7 million enrollees, and the defeat of congressional supporters of the legislation.

The key challenge to Obamacare in 2015 will come in the Supreme Court. A defeat there would certainly make 2015 a potentially near-fatal year for Obama’s only major domestic accomplishment.

The issue the Supreme Court faces is whether participants in health-care exchanges run by the federal government rather than the states can receive subsidies with which to purchase health insurance. As Tevi observes, the text of the legislation explicitly says that subsidies shall be available in exchanges “established by the State.” The text does not call for subsidies in exchanges established by other entities.

Since only 14 states (including the District of Columbia) set up their own exchanges, the subsidy is in limbo in more than 30 states. Only if the Supreme Court decides that the plain language of the statute doesn’t mean what it says will the subsidy apply in these states.

Because the issue is one of statutory interpretation, not constitutionality, Chief Justice Roberts may be more inclined to vote with the other center-right Justices than he was in the case challenging the individual mandate. If he does, and if the government loses the case, the the Court will have eliminated subsidies in more than 30 states.

The implications would be enormous:

Such a move would affect approximately 13 million subsidy recipients in 2016, according to the Kaiser Family Foundation. The subsidies are vital to the ACA not only because they make it easier to purchase insurance, but because they mask the true price of the insurance offerings in the exchanges.

The oft-heard complaint that HealthCare.gov required individuals to enter their personal information before getting a price on insurance plans revealed a key feature, not a bug, of the system. It was designed to prevent the kind of sticker shock that would deter individuals from shopping for plans that were becoming increasingly expensive.

Moreover:

Beyond the removal of the subsidies, a pro-plaintiff decision in King v. Burwell would have another important implication. The individual and employer mandates force individuals to purchase, and employers with more than 50 employees to provide, health insurance. These are both linked to the existence of subsidies in the states.

If the states without state exchanges no longer provide subsidies, they would also no longer have an employer mandate. The individual mandate would also not apply in many cases, specifically where the cost of the cheapest qualifying health-insurance policy amounts to more than 8 percent of an individual’s income.

Obamacare will also face new challenges in Congress, now that Republicans control both chambers. Repeal will not make it past the Senate because of the 60-vote requirement.

However, Tevi identifies three reforms that conceivably could command enough support from Democrats to pass the Senate. They are: (1) repeal of the “medical-device tax,” (2) raising the definition of the full-time work week from 30 hours, so as to end the incentive for employers to cut employee hours below 30 per week, and (3) repeal of the so-called Cadillac tax on high-value employer health-care plans, which encourages employers to reduce the value of their health-care plans, lest they be subjected to the tax.

President Obama would be free, of course, to veto any of these changes, and might do so. But, as Tevi argues, the fact that these matters, and others like them, will be on the legislative agenda will keep Obamacare on the defensive. And the next president, from whichever party, will likely be far more open to significant alterations.

The other big test for Obamacare this year will be how it plays out, and is perceived to play out, in practice. One can debate how it played out in 2014, but the election results confirmed what polling strongly suggested — namely, that Obamacare was not perceived by most Americans as playing out well.

Tevi concludes:

The people will continue to judge the law based on what it costs them, whether the goals of near-universal coverage are met, and whether they will be able to keep the insurance they originally had. They will make their views known, in 2015 and beyond.

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