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The Conservative Judges Who Ruled Against Obamacare Missed This One Very Important Detail


We now know that two conservative judges on the D.C. Circuit Court of Appeals have declared it illegal for the government to subsidize Obamacare health plans in states that didn't set up their own insurance exchanges. In reaching that conclusion, Judge Thomas Griffith, who authored the opinion of the court, sought to rebut each of the Obama administration's arguments to the contrary—that the law clearly contemplates subsidizing health plans in every state whether or not a state built its own marketplace.

But in one instance he based his counterargument on information that became outdated less than one week ago. And the recent development turns that counterargument on its head.

One of the White House's most straightforward arguments is that neither Congress nor the administration would have approved a punitive system so at odds with the ACA's ultimate, stated goal of achieving near-universal insurance coverage. The law seeks to achieve near-universal coverage by mandating the purchase of guaranteed, subsidized (and thus affordable) health plans. Take away the subsidies, and the plans are no longer affordable. If the plans aren't affordable, they're no longer compulsory. And if they aren't compulsory and affordable the coverage expansion goal will be unattainable.

But if you're going to conclude that the law unambiguously makes those subsidies conditional, you ought to dispel every notion that Congress had other ideas, which is what Griffith set out to do.

I sympathize with the poor clerks who were assigned to Google for evidence that the administration and Congress were content with ignoring the importance of the subsidies to the expansion goal. This Sarah Kliff article from December is what they came up with. It turns out that due to drafting quirks, the ACA neither mandates coverage, nor provides for subsidies, in several U.S. territories. Per Griffith, "the supposedly unthinkable scenario the government and dissent describe—one in which insurers in states with federal Exchanges remain subject to the community rating and guaranteed issue requirements but lack a broad base of healthy customers to stabilize prices and avoid adverse selection—is exactly what the ACA enacts in such federal territories as the Northern Mariana Islands, where the Act imposes guaranteed issue and community rating requirements without an individual mandate. This combination, predictably, has thrown individual insurance markets in the territories into turmoil. But HHS has nevertheless refused to exempt the territories from the guaranteed issue and community rating requirements."

If the subsidies aren't central to the program in Guam, why must they be self-evidently necessary in Nebraska? He didn't get the memo.

Last week, Kliff wrote an update. "In letters sent July 16, the Obama administration notified territorial regulators that their residents would be largely exempted from health law requirements…perhaps most importantly the requirement that insurers offer coverage to all shoppers."

In other words, contrary to opinion of the court, the administration believes that absent subsides (and thus absent a broadly applicable mandate) the coverage guarantee has to go as well, leaving the law's explicit coverage goals well out of reach.

I imagine Griffith and his clerks finalized the opinion before the administration updated its position, and weren't aware that a recent policy change had undercut his argument. I also imagine he wouldn't have changed his ruling even if he had learned of the Guam development in time to amend his opinion. In either case, one of the administration's core arguments remains unanswered. Why would Congress compromise its own goal by making the insurance subsidies so conditional? Given the conservative judges' resolute hostility to the possibility that the statute's problem is unintentional sloppiness, you can't help but wonder if perhaps they backfilled their ruling to support a conclusion that they'd already reached.