Wonkbook: What you need to know about Obamacare’s wild day in court

July 23

Welcome to Wonkbook, Wonkblog’s morning policy news primer by Puneet Kollipara (@pkollipara). To subscribe by e-mail, click here. Send comments, criticism or ideas to Wonkbook at Washpost dot com. To read more by the Wonkblog team, click here. Follow us on Twitter and Facebook.


(Photo by Andrew Harrer/Bloomberg)

Wonkbook’s Number of the Day: 4.7 million. That's the number of people who could see their Obamacare premiums go up in federal marketplaces if the ruling in Halbig is allowed to stand.

Wonkbook’s Chart of the Day: These charts show how kids 12 and under are the fastest-growing group of minors being apprehended at the border.

Wonkbook's Top 5 Stories: (1) Breaking news: Obamacare's day in court; (2) news numbers and trends in the migrant crisis; (3) Ryan and Obama's ideas to help workers; (4) Detroit's pension solution's implications; and (5) is Common Core the new 2016 litmus test?

1. Top story: Obamacare had a crazy day in court — here's what it means

Court: ACA federal-exchange subsidies are illegal, because statute says so. "The health care law specifically authorizes subsidies in 'an exchange established by the state,' and the plaintiffs in both cases said the administration violated the law by also extending subsidies to the 36 states using the federal system. They said Congress meant for the tax credits to serve as an incentive for states to establish their own exchanges....The D.C. Circuit...ruled against the administration. Two federal courts have previously dismissed similar challenges, making Tuesday's Halbig victory especially important for the challengers. The D.C. Circuit ruling guarantees that the issue will move forward." Sophie Novack and Sam Baker in National Journal.

Primary sources: The full text of the D.C. Circuit's decision in Halbig and the 4th Circuit's decision in King.

But another court ruled a bit differently. "Less than two hours later, a panel of the U.S. Court of Appeals for the 4th Circuit, based in Richmond, handed down a contradictory ruling on the issue in a separate case, raising the possibility of yet another high-stakes battle over the law playing out before the Supreme Court. The conflicting rulings give traction to the most serious current threat to the Affordable Care Act, which has been battered by a series of legal challenges since it was enacted four years ago. The dispute centers on whether the subsidies may be awarded in states that chose not to set up their own insurance marketplaces and instead left the task to the federal government." Sandhya Somashekhar and Amy Goldstein in The Washington Post.

Explainer: What happens next? Jason Millman in The Washington Post.

Will Obamacare really head back to the Supreme Court? Not necessarily. "The federal government has already stated that it's going to request 'en banc' review of the Halbig decision....That would mean all eleven judges would review the ruling issued by the panel of 3 judges drawn for the case. The D.C. Circuit as a whole skews more liberal than the panel of three judges who heard the case...meaning there's a decent chance en banc review could reverse the decision. The Fourth Circuit also skews liberal, so even if the plaintiffs requested en banc review in the King case, that ruling would stand. In the end, the two rulings will likely end up consistent with each other. It is inconsistent rulings that are more likely to result review from the nation's highest court. That said, the Supreme Court could still choose to hear the case." Adrianna McIntyre in Vox.

@charlesornstein#Halbig dissent: "It is inconceivable that Congress intended to give States the power to cause the ACA to 'crumble.'"

If SCOTUS does take the case up, Obamacare probably isn't doomed. "The argument against the administration’s rule is straightforward: if a state refuses to set up an exchange, forcing the federal government to operate it instead, then the subsidies aren’t available. That legal reading of the statute makes some sense, because Congress may have wanted to encourage states to create exchanges with the carrot of promising subsidies for the states’ residents. But the courts are required to uphold the rule if the law is ambiguous and the administration’s position is reasonable. The Supreme Court will probably uphold the rule under that lax standard." Tom Goldstein in The Washington Post.

@David_Ingram: Obama has largely reshaped the D.C. Circuit over the past 14 months, as @lawrencehurley wrote in another context: http://www.reuters.com/article/2014/06/02/us-usa-climatechange-court-analysis-idUSKBN0ED2CC20140602

For now, subsidies will likely continue. "Because of the time involved, the approximately 5 million people in those states who have already signed up for insurance using the subsidies will almost certainly continue to receive them this year, although it is theoretically possible that they could be pulled back by the courts. A similar circuit split occurred in an earlier challenge to the Affordable Care Act, which was decided by the Supreme Court in 2012; the administration then proceeded in implementing the law as if it were unchallenged until the case was completely settled." Margot Sanger-Katz in The New York Times.

If Halbig stands, insurance would be most unaffordable in the poorest states. "If the D.C. Court decision is upheld, it could make health insurance unaffordable for the people who live in states that use the federal exchange. Not coincidentally, the states that didn't set up their own exchanges tend to be Republican-controlled. They also comprise much of the Deep South — some of the poorest states in the country....Because the subsidies are tied to individuals' incomes, poorer states have received, on average, even steeper discounts on premiums." Olga Khazan in The Atlantic.

Charts: 4.7 million people could see higher premiums with the Halbig ruling on Obamacare. Christopher Ingraham in The Washington Post.

Guam's surprising role in Halbig. "A weird quirk of the health care law made American territories like Guam and American Samoa subject to certain requirements but not others in way that was terrible for the insurance marketplace. Health plans in the territories had to accept all customers, for example, but didn't have any individual mandate or insurance subsidies....The District of Columbia Court of Appeals cited the situation in Guam to push back against a specific Obama administration argument: that there was no way that the health reform law intended for federally-run exchanges not to have subsidies, because that would throw insurance markets into such havoc." Sarah Kliff in Vox.

While you weren't looking: Judge tosses out GOP senator's lawsuit, lets Congress keep using small biz exchange. "U.S. District Judge William Griesbach has dismissed a lawsuit from Sen. Ron Johnson (R-Wis.) challenging new rules that require federal lawmakers and their staff to purchase plans through the health care law’s new online insurance exchanges for small businesses. Johnson...argued that the Obama administration unfairly twisted the rules in the law to allow those working for a massive employer — Congress — to access plans and tax breaks that lawmakers had intended for small companies. Normally, the small-business exchanges are reserved for firms with fewer than 50 workers. All told, Congress employs upwards of 20,000 staffers." J.D. Harrison in The Washington Post.

The administration will broaden its contraception accommodation. "The Obama administration will create a new option for certain religious nonprofits that object to both the Obamacare contraception mandate and the earlier administration efforts to find accommodation for them, according to a court document filed Tuesday. The brief filed in the U.S. Court of Appeals for the 10th Circuit says the administration is broadening the accommodation policy after the Supreme Court ruled that Wheaton College, a religious institution, did not have to provide contraception in employee health plans while the issue makes its way through the courts. Details were not spelled out." Joanne Kenen in Politico.

@jenhab: Hobby Lobby, now Halbig: Not a great month for Obamacare in the courts

Obamacare premiums haven't lived up to doomsday predictions. "According to a PricewaterhouseCoopers analysis of 18 states' initial filings, 10 states will see average premium increases of less than 10 percent — nominal hikes in line with the standard increases...every year with or without Obamacare....Because so many of Obamacare's 2014 enrollees signed up at the very end of the enrollment window, they haven't filed a ton of medical claims for insurers to work from....Big cuts are most likely from insurers that were especially cautious about 2014...while big increases are most likely from plans that thought they'd end up with healthier customers than they did. An influx of new insurers is also helping to keep premium increases in check." Sam Baker in National Journal.

Congressional investigators go undercover, sign up fake applicants for care, subsidies. "Undercover GAO investigators tried to obtain health plans for a dozen fictitious applicants online or by phone, using invalid or missing Social Security numbers or inaccurate citizenship information. All but one of the fake applicants ended up getting subsidized coverage — and have kept it. In one instance, an application was denied but then approved on a second try. In six other attempts to sign up fake applicants via in-person assisters, just one assister accurately told an investigator that the applicant’s income was too high for a subsidy." Amy Goldstein in The Washington Post.

Other health care reads:

What the Hobby Lobby ruling means for America. Binyamin Appelbaum in The New York Times Magazine.

Antibiotic resistance could be "next pandemic," CDC says. Hoai-Tran Bui in USA Today.

WESSEL: Congress' dysfunction hands power to the courts. "Congress, unable to agree on almost anything, is incapable of responding to court interpretations of often-vague statutes even when the Court invites a response....The trend matters greatly. With the Civil Rights Act of 1991, Congress overrode as many as a dozen Supreme Court rulings. But Congress hasn’t responded to the court’s 2013 undoing of provisions of the Voting Rights Act that had been reaffirmed overwhelmingly by Congress in 2006. If the appellate panel’s 2-1 ruling is upheld, the bitter partisan debate over the Affordable Care Act will make it hard to fix the flawed statute." David Wessel in The Wall Street Journal.

ADLER AND CANNON: Reining in Obamacare and Obama. "Because the ruling forces the Obama administration to implement the Affordable Care Act as written, consumers in 36 states would face the full cost of its overpriced health insurance....The resulting backlash against how ObamaCare actually works could finally convince even Democrats to reopen the statute. At its heart, though, Halbig is not just about ObamaCare. It is about determining whether the president, like an autocrat, can levy taxes on his own authority." Jonathan H. Adler and Michael F. Cannon in The Wall Street Journal.

CASSIDY: Why SCOTUS will uphold Obamacare again. "In June, 2012...the high court, in a five-to-four decision, ruled constitutional the A.C.A. provision mandating that individuals purchase insurance....This innovative and largely unexpected maneuver looked like a political one....Roberts...found a way to avoid unleashing the enormous political storm that would doubtless have followed the Court’s decision to overturn President Obama’s signature reform....Two years on...I very much doubt that the Chief Justice will have discovered the urge to strike down the Affordable Care Act." John Cassidy in The New Yorker.

COHN: What are these lawsuits really about? "At best, this is a case about how literally courts should interpret the text of a statute and how much they should defer to executive agencies in cases of ambiguity—real issues, to be sure, but ones about which nobody said a peep until long after Obamacare became law. And at worst? It’s an attempt to exploit a drafting error, the kind that happens all the time with complex legislation, in order to get one last shot at repealing a program that has already helped millions to get insurance but that drives libertarians and conservatives crazy." Jonathan Cohn in The New Republic.

PONNURU: Courts can't fix Obamacare. "It's wrong, then, to say that Congress obviously didn't intend to include this restriction. It can't be read out of the law simply because, given the actual state of play in American politics, the consequences of that restriction ended up being severely harmful to the program's future. As U.S. Circuit Judge Thomas Griffith wrote in the first decision, the administration has already acknowledged that other features of Obamacare, as written, don't work. It's not up to the courts to fix all the law's deficiencies." Ramesh Ponnuru in Bloomberg View.

Top opinion

BARRO: Not everyone is addicted to inflation. "The number of conservatives with dovish views on monetary policy is small, but they are concentrated in the place they matter most: the Fed. Over the last three years, while conservative commentators were alleging that government statistics were faked to hide high inflation, the politically heterodox Federal Reserve Board was buying bonds en masse to push down long-term interest rates and telling anyone who would listen that it intended to keep the monetary ease going for a long time....On inflation, as on curriculum, the conservatives who matter most have been generally able to resist the demands of their base." Josh Barro in The New York Times.

DECKER: Europe's energy policy strengthens Putin's hand. "Since the downing of a Malaysia Airlines flight by pro-Russia separatists in the war-torn region last week, the United States and Europe have tightened sanctions against some Russian industries and threatened more. But the threat may mostly be bluster. On Tuesday, European foreign ministers backed away from imposing the toughest sanctions to continue with their strategy of pinprick sanctions and threats of toughness. The reason is simple: Europe desperately needs a steady supply of Russian natural gas, a tight spot that Europe's policies have only made tighter despite years of warning. That's, in part, why Western actions and rhetoric haven't deterred President Vladimir Putin." Brett M. Decker in USA Today.

PORTER: Dearth in innovation for key drugs. "There is clearly something wrong with pharmaceutical innovation. Antibiotic-resistant infections sicken more than two million Americans every year and kill at least 23,000. The World Health Organization has warned that a 'post-antibiotic era' may be upon us, when 'common infections and minor injuries can kill.' Even the world’s tycoons consider the proliferation of antibiotic-resistant bacteria one of the crucial global risks of our times, according to a survey by the World Economic Forum. Yet the enthusiasm of the pharmaceutical industry for developing drugs to combat such a potential disaster might be best characterized as a big collective 'meh.'" Eduardo Porter in The New York Times.

GOMEZ: Perry spotlights need for border solution. "Think what you will of Texas Gov. Rick Perry's decision to send 1,000 National Guard troops to the state's southern border to help stop the flood of children racing across the border. Many Republicans see it as an act of leadership in the face of federal inaction. Many Democrats see it as a political ploy to raise Perry's profile for a presidential run. But one thing is certain: Perry's decision shines a bright spotlight on the need to focus on how best to secure our nation's border, an important debate that has been so watered down by partisanship and political gridlock that the country is only considering quick fixes that will do little to fix the broader problems." Alan Gomez in USA Today.

Joy ride interlude: Adorable sidekick pup rides in scooter.

2.The latest in migrant children crisis.

Children 12 and under are fastest-growing group of unaccompanied minors. "As the number of unaccompanied children...has surged, the increase in apprehensions among children ages 12 and younger has been far greater than among teens....The new data show a 117% increase in the number of unaccompanied children ages 12 and younger caught at the U.S.-Mexico border this fiscal year compared with last fiscal year. By comparison, the number of apprehensions of unaccompanied teenagers ages 13-17 has increased by only 12% over the same time period. Even though the growth is higher among younger children, the bulk of unaccompanied children caught at the border remain teenagers." Jens Manuel Krogstad, Ana Gonzalez-Barrera and Mark Hugo Lopez in Pew Research Center.

Migrant children have health issues, but not the ones you'd think. "Gingrey's concerns have been widely circulated as part of a public campaign by folks who share his view that the kids should be sent back. And some of the points he's raised have been widely rebuffed. The current Ebola outbreak has been confined to Africa, as have past outbreaks. And neither dengue nor the 'kissing bug' disease known as Chagas...spread from human to human....But some health issues in this contentious debate require closer examination. There have, for example, been a handful of reported cases of TB among the children. And concerns that the children may not have been vaccinated — or may harbor scabies and lice — aren't as absurd as the Ebola claims." Linda Poon in NPR.

The flow of children across the border has slowed. "From October through the end of May, the U.S. took into custody 46,932 unaccompanied children, according to U.S. Customs and Border Protection. By the end of June, that number had climbed to 57,525. By comparison, 38,759 children were apprehended in the 2013 fiscal year. The influx of minors has receded in recent weeks. During the week of June 22, 1,985 migrants were apprehended. That dropped to 1,260 the following week, 977 during the week of July 6 and to 672 for the week that ended Saturday." Miriam Jordan in The Wall Street Journal.

Explainer: Despite crush of children, illegal immigration low. Alicia A. Caldwell in the Associated Press.

Legislation status update: Both parties to pare back Obama's $3.7B request. "House Republicans are planning on Wednesday to unveil their own plan to deal with the border crisis that would provide less than half of the $3.7 billion in emergency spending requested by President Obama....Meanwhile, Senate Democratic leaders are working on a supplemental spending bill that would grant the White House $1 billion less than it sought....Also on Wednesday, Republican Rep. Kay Granger of Texas is expected to release a 'set of principles' that have been put together by herself and other members of a House 'border working group' created by Speaker John Boehner on immigration policy." Billy House and Michael Catalini in National Journal.

Explainer: 4 big reasons Obama's border-funding request is in trouble. Emma Dumain in Roll Call.

U.S. targets money launderers to track child smugglers. "The increasingly costly and divisive border crisis is pushing federal investigators to crack down on money-laundering schemes they say are being used to smuggle thousands of Central American children into the United States. Agents...are targeting suspicious patterns of deposits and withdrawals through 'funnel accounts' held at U.S. banks....Human-smuggling rings are using such bank transactions to fund their activities, officials said. In recent months, the arrests of several low-level money launderers, drivers, scouts and guides have bolstered and expanded the government's ongoing effort, the officials said." Brian Bennett in the Los Angeles Times.

Other immigration reads:

The border surge: Is it a "crisis" or not? Billy House and Rachel Roubein in National Journal.

Animals interlude: "I know where your cat lives" maps kitty photos.

3. New programs to help the poor and unemployed.

U.S. seeks to improve job-training programs. "Obama spoke at a signing ceremony for bipartisan job-training legislation aimed at improving business engagement and accountability in federally funded programs....The White House used the occasion to release a six-month review of federal job-training programs. The review concludes that the government needs to better engage U.S. employers, improve the use of data, and boost apprenticeship programs so workers can earn while they train. The report said the government is working to tailor training and grants to better match jobs that are in demand. And it stressed the need for regional partnerships and for programs that provide stepping stones for a seamless transition from one level of education to the next." Associated Press.

Some good news for long-term unemployed? "A new study by a pair of Federal Reserve Board economists offers some hope for the future. In a paper issued this week, Tomaz Cajner and David Ratner find that the percentage of the unemployed who have been jobless for more than 27 weeks — the definition of 'long-term' unemployment — has been dropping sharply in recent months, and that there is strong evidence to suggest that it is because they are finding jobs rather than simply dropping out of the labor force altogether. The news is good for the jobless, and it’s also good for Cajner and Ratner’s boss, Federal Reserve Board Chair Janet Yellen." Rob Garver in The Fiscal Times.

Long read: Economic mobility is alive and well for Americans who pursue technical or practical training. Tamar Jacoby in The Wall Street Journal.

Paul Ryan to release deficit-neutral poverty plan. "House Budget Committee Chairman Paul Ryan (R-Wis.) this week will shift from his years-long focus on cutting spending to a new anti-poverty proposal that consolidates existing programs and gives more flexibility to the states — part of an effort to reorient the Republican Party...toward addressing economic anxieties of the most disadvantaged Americans. Ryan will announce the new proposal Thursday amid a battery of ideas aimed at reshaping the GOP....He will endorse an expansion of a tax-credit for the working poor similar to one that President Obama has also proposed and other measures to overhaul education and criminal justice programs." Zachary A. Goldfarb in The Washington Post.

Explainer: Paul Ryan's plan will include 6 pillars. Damian Paletta in The Wall Street Journal.

Other economic reads:

U.S. housing turns the corner; inflation creeps up. Lucia Mutikani in Reuters.

Home prices rose more than expected in May. Prashant Gopal in Bloomberg.

Uplifting interlude: Man brings video camera to South Africa orphanage. What happens next will make you smile.

4. Why Detroit's bankruptcy matters beyond Detroit

Detroit’s record bankruptcy is likely to hit investors much harder than pensioners. "One group of stakeholders stands to make out better than many imagined early on: city retirees. Make no mistake, the city’s 32,000 retirees stand to absorb significant cuts, but they are nothing like the reductions of 27 percent or more that were envisioned in the emergency manager’s restructuring plan released earlier this year....The more modest reductions were made possible by an agreement by the state, private donors and foundations to provide $816 million for the city’s underfunded pension funds. The 'grand bargain' brokered by Michigan Gov. Rick Snyder (R), also puts the Detroit Institute of Arts’ world-class collection in a protected trust." Michael A. Fletcher in The Washington Post.

Pensions may no longer be sacred cows. "Pensions have been under political attack in recent years, with some politicians arguing they can't afford to fund generous retirements at the same time they're cutting services. Numerous states and cities have trimmed the type of pension plans they're offering employees — mostly new employees. But pension benefits already earned have always been sacrosanct, protected by federal law and, often, state constitutions. Retirees could rest easy, knowing their money couldn't be touched. The vote Monday in Detroit by retired city workers to cut their own benefits by 4.5 percent calls all that into question." Alan Greenblatt in NPR.

Story behind Detroit's water crisis is not so simple. "The story of how this has happened...is not as simple as one of government incompetence or indifference to the poor. The Detroit Water and Sewerage Department says that nearly half of its customers haven't been paying their water bills, for a total of about 90,000 delinquent accounts, leaving the public utility with some $90 million in debt. But in a city of abandoned properties, squatters and tremendous poverty — 38 percent of Detroit lives below the poverty line — the department has had a hard time distinguishing empty homes from occupied ones, and customers who legitimately can't afford to pay from those who've simply opted not to." Emily Badger in The Washington Post.

Insurers vow to fight bankruptcy deal. "Two major bond insurers that could lose billions in Detroit's bankruptcy blasted the city's plan to pay its retirees more than financial creditors. After pensioners voted by a wide margin to accept benefit cuts, bond insurers Syncora and Financial Guaranty Insurance Co. (FGIC) pledged to continue their vigorous legal fight against the city. Judge Steven Rhodes will now conduct a trial starting Aug. 14 to consider evidence and witness testimony before determining whether the plan is fair, feasible and legal and can be approved." Nathan Bomey in the Detroit Free Press.

Other financial reads:

U.S. judge orders Argentina, creditors to meet until deal reached. Nate Raymond and Joseph Ax in Reuters.

Congress is split on taxing of corporate inversions. Kristina Peterson in The Wall Street Journal.

Science interlude: How our bodies know left from right.

5. The new 2016 conservative litmus test: Common Core

Louisiana parents, teachers, charters sue to get the Common Core back on track. "A group of parents, teachers and a foundation that runs charter schools filed a lawsuit Tuesday alleging that Louisiana Gov. Bobby Jindal (R) lacks the authority to withdraw his state from the Common Core national academic standards. Jindal, a possible 2016 presidential contender, was once a strong backer of the Common Core State Standards....But as the standards came under fire from critics — particularly tea party groups — Jindal’s support dissolved." Lyndsey Layton in The Washington Post.

Not the test 2016 hopefuls were hoping to take. "If you’re searching for signs that a Republican politician is serious about a 2016 presidential run, watch what he or she says about Common Core. Over the past several months, the state education standards developed by a bipartisan group of governors and educators have become one of the conservative movement’s biggest bugbears. Common Core is now 'radioactive,' as Iowa GOP Gov. Terry Branstad put it recently....Gov. Scott Walker of Wisconsin became the latest 2016 contender to ditch the standards....Earlier this week, New Jersey governor Chris Christie signed an executive order creating a commission to examine the efficacy of the standards. The move was a hedge by Christie." Alex Altman in Time Magazine.

Colleges need to help further the goals of Common Core standards, report says. "Common Core State Standards in mathematics, writing, and literacy have been adopted by 43 states and the District of Columbia....Some states have resisted the standards however, and they remain highly politicized and deeply controversial among educators. But one of the biggest barriers to carrying out the standards, according to the report, is that colleges have not adjusted their admissions, financial-aid, and remedial-education policies to line up with the standards. As a result, the report says, 'The Common Core standards appear at the moment to end at the college gate.'" Katherine Mangan in The Chronicle of Higher Education.

In N.C., McCrory signs Common Core changes into law. Four other states have also passed laws to rewrite the standards. The law directs the State Board of Education to rewrite the Common Core standards based on recommendations from a new 11-member standards advisory commission. Common Core, which schools began testing two years ago, would remain in place until the new standards are completed....The commission can choose to integrate parts of the current Common Core into the new curriculum." Katelyn Ferral in the Associated Press.

Other education reads:

FAFSA decimal-point fix could mean less aid. Kelly Field in The Chronicle of Higher Education.

Dancing interlude: This dad dances adorable with his daughter after he gets home from work.

Wonkblog roundup

Detroit’s record bankruptcy is likely to hit investors much harder than pensioners. Michael A. Fletcher.

Here’s what Obamacare’s authors said they actually meant. Emily Badger.

Today was one of Obamacare’s craziest days ever. What now? Jason Millman.

The companies with the stingiest 401(k) plans. Jonnelle Marte.

Janet Yellen thinks social media is overvalued. Matt O'Brien.

The 9-to-5 workday is practically an invitation to ethical lapses. Here’s why. Christopher Ingraham.

Why you may be paying for someone else’s mortgage relief. Dina ElBoghdady.

4.7 million people could see higher premiums with the Halbig ruling on Obamacare.Christopher Ingraham.

The potentially huge cost of today’s Obamacare decision. Jason Millman.

Chart: Americans can’t stop eating Chipotle’s burritos. Roberto A. Ferdman.

Et Cetera

Obama administration said to plan oil-by-rail rules. Jim Snyder and Thomas Black in Bloomberg.

Air-traffic mistakes surged again in 2013, FAA data show. Andy Pasztor in The Wall Street Journal.

Does the next VA secretary face an impossible task? Stacy Kaper and Jordain Carney in National Journal.

Got tips, additions, or comments? E-mail us.

Wonkbook is produced with help from Michelle Williams and Ryan McCarthy.

Comments
Show Comments
Most Read Business
Next Story
Max Ehrenfreund · July 23