The nation’s No. 2 court on Tuesday slapped down the Obama administration in a 2-1 decision that could kill the president’s signature health care law.
A less prestigious federal appeals court issued a contradictory opinion the same day, but if the Supreme Court upholds the DC Circuit’s ruling, it will force Congress back to the drawing board to design a health law that is genuinely affordable, not just falsely titled “Affordable Care Act.”
The ruling in Halbig v. Burwell bars the federal government from handing out taxpayer-funded subsidies to people who buy ObamaCare plans in nearly two-thirds of the states — New Jersey and 35 others that refused to set up their own insurance exchanges.
Those subsidies took the sting out of being forced to buy pricey ObamaCare plans. If the ruling sticks, buyers in those states will have to pay full price, on average a whopping four times the subsidized price they paid this year.
Quadrupling the price would trigger a mass exodus out of the plans, causing what the insurance industry calls a “death spiral.”
Sadly, many of the people who’ll be forced to flee the exchanges had cheaper health coverage pre-ObamaCare — but the president’s law outlawed plans that didn’t contain all the bells and whistles he deemed necessary.
The DC Circuit ruling also chastised the Obama administration for rewriting the law to suit its own ends.
Judge Thomas Griffith, writing for the majority, declared: “The Constitution assigns the legislative power to Congress, and to Congress alone.” No more governing by fiat, Mr. President.
The businesses and individuals who sued in Halbig argued that the actual wording of the Affordable Care Act clearly allows the IRS to provide subsidies (via a tax credit) only to buyers in states that established state exchanges.
Section 1401 of that law unambiguously states that subsidies will be made available “through an exchange established by the state.”
The subsidies were intended as a carrot to persuade states to establish exchanges. But surprise, only 14 states went along. The others, mostly led by Republican governors, refused.
Late in the game, the administration had to establish the federal healthcare.gov exchange to get ObamaCare launched in those uncooperative states.
In 2012, the Congressional Research Service cautioned that the text of the law plainly indicated “the IRS’ authority to issue the premium tax credits is limited only to situations in which the taxpayer is enrolled in a state-established exchange.”
Despite that and other warnings, IRS officials last fall dispensed tax subsidies in all 50 states.
Administration lawyers argued that, regardless of what Section 1401 says, Congress envisioned offering subsidies to buyers nationwide. The court didn’t buy it.
“The fact is that the legislative record provides little indication one way or other of congressional intent,” wrote Griffith.
No wonder. ObamaCare was crammed through the Senate on Christmas Eve 2009, before lawmakers had read it, much less debated it.
Without subsidies, the Affordable Care Act is just the opposite — hugely unaffordable.
According to the Department of Health and Human Services, 87 percent of people who signed up for ObamaCare for 2014 qualified for subsidies, and on average they paid just 24 percent of the true cost of their plan — $82 a month instead of $376.
That $82 price tag didn’t mean ObamaCare had lowered insurance costs. It just shifted the cost from premium payers to taxpayers.
The court ruled “with reluctance,” Griffith said.
“At least until states that wish to can set up exchanges, our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal exchanges and for health-insurance markets more broadly. But, high as those stakes are, the principle of legislative supremacy that guides us is higher still.”
The judges made it clear that either Congress must act to change the law (highly unlikely) or states must establish their own exchanges (also unlikely) or ObamaCare will collapse due to its unaffordable premiums.
The ruling puts ObamaCare in legal limbo, even with a less influential court, the 4th Circuit, issuing a conflicting ruling. The administration says it will request an en banc hearing before the entire 11-judge DC Circuit, which is weighted in Obama’s favor, with seven Democratic appointees.
But the issue is plainly headed to the US Supreme Court eventually. Two other federal appeals courts are deciding challenges almost identical to Halbig. Any disagreement among them will force the high court to rule.
Don’t bet that Chief Justice John Roberts will save ObamaCare again: The issue here is the clear language of the law — and twice in recent months the Supreme Court has emphatically declared that the executive branch must execute the laws, not rewrite them.
Betsy McCaughey is the author of “Beating ObamaCare 2014.”