by Katherine Restrepo
Director of Health Care Policy, John Locke Foundation
Tuesday’s court of appeals ruling on Halbig vs Burwell garnered some long-overdue media attention.
The plaintiffs claim that the law clearly states that subsidies shall only be distributed to exchanges established by a state. If a state refuses to set up its own exchange, the federal government is in charge of creating a federal fallback exchange for that state. But there is no parallel language in the law that allows for subsidies to be distributed through a federal exchange. Michael Cannon of the Cato Institute and Case Western Reserve law professor Jonathan Adler have thoroughly investigated the situation for the past three years. They conclude that both oral and written evidence supports this statutory interpretation.
So the plaintiffs are asking for the Obama administration to follow its own law. Let’s pretend that it did. Since subsidies would not be available in federal exchange states, employers would be freed from Obamacare’s employer mandate.
For example – In a state exchange (where subsidies are legal), if an employer with 50 or more full time workers does not provide health insurance, and one of the employees purchases an exchange plan and qualifies for a subsidy, then the employer is hit with a penalty. Receiving a subsidy triggers a tax on the employer.
Meanwhile, if we apply the same scenario in a federal exchange, no subsidies would eliminate the law’s tax on large employers who either do not provide health coverage for their workers or who do offer coverage (just could be subpar to the law’s pricey standards).
But instead of reporting on the crux of the plaintiffs’ argument, the media unleashed a flood of stories on the 5 million people who would potentially lose access to subsidized private coverage if this lawsuit ever made its way through the legal system. That would certainly be problematic, but these individuals would be exposed to how the law actually operates. Of course, this dilemma cannot be ignored. Congress would be tasked with the responsibility of reconsidering the way in which the law is written, as it possesses the legislative power to do so.