Sometimes the headline writers don’t exaggerate a big event. The ruling of the U.S. Court of Appeals for the District of Columbia Circuit, the most prestigious circuit, striking down subsidies in federally operated exchanges does indeed amount to a “devastating” or “crippling” or “massive” blow to Obamacare — that is, if the Supreme Court agrees. This is a case of statutory interpretation, not Constitutional law. Therefore, Congress could conceivably “fix” it — or not. And there’s the rub.
The court held:
We conclude that appellants have the better of the argument: a federal Exchange is not an “Exchange established by the State,” and section 36B does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges. We reach this conclusion by the following path: First, we examine section 36B in light of sections 1311 and 1321, which authorize the establishment of state and federal Exchanges, respectively, and conclude that section 36B plainly distinguishes Exchanges established by states from those established by the federal government. . . .
The government urges us, in effect, to strike from section 36B the phrase “established by the State,” on the ground that giving force to its plain meaning renders other provisions of the Act absurd. But we find that the government has failed to make the extraordinary showing required for such judicial rewriting of an act of Congress. Nothing about the imperative to read section 36B in harmony with the rest of the ACA requires interpreting “established by the State” to mean anything other than what it plainly says.
In point of fact, congressional intent in this case is sort of a fiction, since few read the bill and really understood it. That said, the plain language of their own handiwork has come back to bite the Democrats.
Todd Gaziano of the conservative-libertarian Pacific Legal Foundation explains:
The decision striking down the administration’s “creative” interpretation equating state exchanges with those run by federal bureaucrats is not the least bit surprising. The administration essentially argued that when Congress used the word “state” it also meant the national government. The administration constantly tries to undermine the Constitution’s dual sovereignty-federalism structure, but the courts know it is a fundamental background principle. Thus, the courts are not likely to believe Congress means the federal government when it uses the word “state.” Moreover, the administration’s attempted jujitsu of the Obamacare statute in many other instances is simply losing all credibility with honest and intelligent people.
I’ll have more to say later about the legal reasoning, but suffice it to say that Obamacare without subsidies in 36 states is a shell of its former self. Moreover, the availability of subsidies from state-run exchanges has the potential to make for a giant swoosh as people rush to states with subsidized healthcare.
There are a number of immediate ramifications:
Democrats will be hard-pressed to come up with their alternative to Obamacare — or do they really think Congress will “fix” a law this unpopular?
The GOP better get on the ball and come up with its alternative. Now is certainly the time.
The midterms, and more so the 2016 elections, become an even stronger referendum on Obamacare — Democrats will want to “fix” it and Republicans will want to replace it.
This is a nightmare for red-state Democrats who will have to say whether they’d vote to reinstate the subsidies or not.
The ruling leaves the rest of Obamacare intact, but as we saw from the fights over the individual mandate, the subsidized exchanges are the heart and soul of Obamacare. Without it the government is mandating, taxing and regulating without (aside from Medicaid) any discernible beneficiaries.
It seems things have taken a severe turn for the worse for the only “accomplishment,” domestic or foreign, the president has had after 5 1/2 years.