The contraception case is big, but another challenge could really hurt Obamacare


REUTERS/Gary Cameron

Obamacare faces two separate court challenges on Tuesday, but only one could deliver a major knockout blow to the law.

The case getting the most attention is tomorrow's Supreme Court challenge to the health care law’s requirement for employers to provide birth control to their workers. At the same time Tuesday morning, the District of Columbia’s Circuit Court of Appeals will consider whether Obamacare allows premium subsidies to flow through federal-run health insurance exchanges. That case has been called “the greatest existential threat” to the survival of the health care law by one of Obamcare’s staunchest supporters.

First, the contraception case

The Supreme Court will hear oral arguments Tuesday morning in Sebelius v. Hobby Lobby Stores Inc. and Conestoga Wood Specialties Corp v. Sebelius. The challenges are similar – both companies’ owners argue that the law’s contraception mandate is unconstitutional because it violates their religious liberty. My college Jamie Fuller has a good roundup of what you need to know about the cases.

Should the Obama administration lose on the contraception requirement, the impact on its signature health care law would be minimal. A loss would essentially give employers the opportunity to refuse contraception coverage if they have a religious exemption, but the rest of the law wouldn't be touched.

About four dozen lawsuits have been filed by for-profit companies against the contraception mandate in the past two years, but advocates for the requirement say it’s hard to measure what the real-life effect would be if the Supreme Court sided with the plaintiffs.

“It’s difficult to read the minds of other employers in the future to determine who might want to assert some kind of religious belief to deny this benefit to others,” said Marcia Greenberger, founder and co-president of the National Women’s Law Center.

“Because this is really quite a new argument that is being put forward, I think these kind of estimates are difficult,” she continued. “There’s no doubt that millions of women are now entitled to this benefit that didn’t have it before.”

The contraception case is significant for other reasons concerning religious liberty and the rights of corporations. It could also have a much broader impact on anti-discrimination laws, Adam Liptak of the New York Times points out.

Federal subsidies are the bigger deal for the law

If we’re just thinking about what these cases could mean for Obamacare’s future, the cases related to federal subsidies are a much bigger deal. Opponents to the law are challenging the IRS interpretation that Congress authorized individuals in states with federal-run exchanges to access premium subsidies.

If the opponents’ challenge is successful – and the law’s supporters say the cases are a real longshot – it would deal a major blow to the law in the 36 states with federal-run exchanges. According to latest monthly enrollment report from HHS, 85 percent of those signing up for health plans in federal exchange states have received federal subsidies. Without those subsidies, coverage would be less affordable for many, and therefore a much less attractive option to those who consider themselves healthy. That would mean the mix of people participating in the program would be sicker, which would drive up insurance costs and threaten Obamacare's future.

The law’s opponents argue that Congress never authorized subsidies in federal-run exchanges, and they claim this was done on purpose. They say Congress wanted to incentivize states to run their own exchanges, an option that only 14 states and the District of Columbia chose in 2014.

The law’s supporters argue that the law doesn’t differentiate between federal-run and state-run exchanges, so people should be able to receive subsidies no matter who’s administering the insurance marketplaces. Further, they say the broad purpose of the law is to expand access to affordable insurance regardless of who runs the exchange.

There are four pending cases in federal court challenging the subsidies. In Tuesday’s case, Halbig v. Sebelius, a lower federal court in January upheld the IRS rule allowing subsidies in federal-run exchanges.

“The Court finds that the plain text of the statute, the statutory structure, and the statutory purpose make clear that Congress intended to make premium tax credits available on both state-run and federally-facilitated Exchanges,” District Court Judge Paul Friedman wrote in his decision.

A separate challenge in Virginia federal court has also been rejected, and the plaintiffs have also appealed that decision. Two similar cases are also pending in Indiana and Oklahoma.

 

 

Jason Millman covers all things health policy, with a focus on Obamacare implementation. He previously covered health policy for Politico.
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