During the recent King v Burwell Supreme Court oral arguments, Justice Anthony Kennedy curiously brought up the notion that state exchanges could be considered coercive if the plaintiffs win. In other words, the government’s draconian regulations on insurance companies would push federal exchange marketplaces to the verge of death spirals unless states received subsidies – which means they would be forced to take on the herculean task of building their own health insurance exchanges.
Kennedy makes an interesting point; however, money isn’t being taken away from states if they decline to create state-based exchanges. That act would be coercive, much like the law’s original mandatory Medicaid expansion provision. Before the Supreme Court ruled this unconstitutional, the feds effectively were holding states at gunpoint — either expand medical assistance eligibility or lose all existing federal program dollars.
For more information on the Obamacare oral arguments, see my latest newsletter here.
