William Levin is a graduate of Yale Law School. He writes to comment on the Obamacare case pending before the Supreme Court. He argues that “the road to Obamacare repeal runs through through King v. Burwell.” His column makes assumptions that are subject to reasonable argument, such as Chief Justice Roberts’s ultimate position in the current case and the soundness of the Chief Justice’s position in what he calls Obamacare I, but the analysis nevertheless makes a contribution to our thinking through the issues before us. He writes:
Exactly what is the significance of King v. Burwell, the high profile Obamacare tax subsidy case docketed for decision by the Supreme Court in its Term ending June 30, 2015?
Legally, a reversal by the Court will eliminate the authority to pay subsidies to individuals purchasing health care on the federal exchange, meaning that an estimated 5.4 million people will no longer be eligible to receive a subsidy check averaging $4,700. Taxpayers will save $25 billion, but otherwise the outcome does not sound of overwhelming policy significance.
But that misses the true sequence of events triggered by King. Following Pelosi, it turns out in actually reading the legislation that the obligation to buy or provide insurance is linked to receiving the subsidy.
Employers are subject to fines (“assessable payments”) if they do not offer affordable coverage to full time employees. But under the statute the payment is triggered only if at least one employee receives a subsidy. No subsidy, no fine. No fine, 250,000 employers in the 36 federal exchange states are free to offer non-compliant insurance coverage, no coverage at all, or even coverage actually desired and valued by employees, such as high care Cadillac plans or low-cost plans with high deductibles.
For individuals, the result is slightly less categorical, but still real. The individual mandate penalty does not apply to those who cannot afford coverage. The implementing regulations apply the exemption if the annual cost of coverage exceeds 8% of household income. But in the calculation of cost, the tax subsidy is subtracted. As a result, millions who would have been exempt are forced to buy coverage. Post-King, these millions return to exempt status, lawfully entitled to decline coverage or buy only affordable catastrophic insurance.
The systematic effect of these withdrawals and exemptions produces the widely discussed death spiral of out-of-control premium increases to cover a narrow pool of sick enrollees. Except the shock of King will be immediate and more extensive than previously imagined in a spiral caused by uncoordinated individual decisions. The impact, and attendant uncertainty, hits in June and for individuals, employers and insurers, i.e., everyone, it will be pure chaos.
Politically, the chaos shifts the balance of power. Today President Obama wields a veto pen without fear of override. Post-King, the Obamacare health care system, unfueled by tax subsidies and healthy enrollees, cannot be sustained. Then it is Obama and, more pertinently the Democrats and its presumptive nominee, Hillary Clinton, who must deal with Republicans to salvage a law ravaging the American public. The Obamacare cancer, and all its notorious lies, are 100 percent owned by the Democrats and its massive failure is owned by them as well.
The media will of course blame Republicans, but it is voters who have already concluded that Obamacare is an unworkable disaster. Obama by illegal waiver has sought to put off the day of reckoning until his departure from office. In June, the fears not only get accelerated, they become real.
The political sea change wrought by King begins now. Republicans today are actively caucusing on the best course to defeat Obamacare. The absolutist approach contemplates using reconciliation in the context of a budget bill to repeal the ACA by majority vote. This can offer emotional satisfaction, but no prospect of actual success as Republicans do not have the two-third votes needed to override a presidential veto. It also has the huge downside of entwining Obamacare in the amnesty battle.
The principal alternative being discussed is to offer specific bills targeting the most onerous provisions of the bill, such as the medical device tax. This approach is fine as far it goes, but it suffers the defect of the veto and there are few to no areas where common ground will actually be found with Democrats to generate a veto-proof majority.
By contrast, King is the gift and the answer. In June, the theoretical failures of Obamacare become manifest. In June, Obamacare escapes the arsenal of Obamacare subterfuge, from waiver, unauthorized regulation and concealment, to disguised enrollment statistics and straight out lies. That is the truest contribution of King. Obama has done everything in his power to claim Obamacare works by deferring its consequences. After King, not possible.
As has been rightly observed elsewhere, President Obama retains a power of intransigence even after King and there are dangers that Republicans get blamed, basically for recalcitrance in cleaning up the mess, but the arc of the story is already too strong. Democrats crammed Obamacare down America’s collective throat, and it decided not to stay. By 2016, the newly elected Republican President will have won the mandate to end Obamacare by full repeal.
But how can anyone know the Court in King will end the federal exchange subsidy payments. Here commentators are traditionally cautious. While it is conceded in light of the grant of cert that four votes are guaranteed, Chief Justice Roberts is said to be the wild card. The bitter disappointment has not dissipated among conservatives or the public at large for upholding the individual mandate as a tax.
But Republican strategists err hugely if they join in this contemplative skepticism. It is in truth a dead pull, 100 percent certainty that Roberts joins to form a majority in King. Roberts will never accept that plain meaning in the statute with respect to subsidy payments can be overridden by isolated provisions said, incorrectly, to become unintelligible, absurd or contradictory. Nor is there any chance that Roberts will accept the risible logic that “affordable care” as a purpose means as a matter of legislative fact that subsidies extend to the federal exchanges.
As to Obamacare I, Roberts concluded the individual mandate was a tax, which unfortunately is correct as matter of economics, and therefore that the individual mandate was justified as the constitutional exercise of an enumerated power, the incorrect leap. In King, by contrast, no equivalent doctrinal escape overwrites the ACA limit on subsidy payments to state exchanges.
Democrats and the media already recognize that King is lost, as evidenced by Paul Krugman’s resort to crude rant. And the now infamous Gruber videos have sealed the deal publicly in a manner that even the most committed partisan never saw coming.
That leaves only one open end to the puzzle, which is for Democrats to apply all available pressure on the 36 states using a federal exchange to set up a state exchange. No doubt select states will in fact do so, but with 70 percent of the state chambers controlled by Republicans, material defections among the 36 states will be few.
In the end, no single bullet can solve Obamacare, least of all a legal case addressing one aspect of the ACA legislation. Obamacare was enacted into law by Congress, however deceitfully, and it is only a political solution that will end the nightmare. At the same time, King provides the signal moment when Obamacare is exposed as the failure is has always been destined to become. In eight short months we will be there, in time for King to have a meaningful impact on the 2016 elections.