The Right Prescription

Obamacare’s Prognosis Worsens

The conventional wisdom about its long-term health is wrong.

By 7.30.14

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A while back, I suggested in this space that Obamacare might go the way of McCain-Feingold. That campaign finance “reform” law was not, you will recall, killed by a single lawsuit or act of Congress. Indeed, the general consensus at the end of 2003 was that McCain-Feingold was in perfect health. Less than seven years later it was, for all intents and purposes, dead. It had succumbed to a long series of attacks by determined opponents who were convinced that it was unconstitutional. Much the same thing is obviously happening to PPACA.

This view runs contrary to the conventional wisdom, of course. Most pundits and politicians, including a number of libertarians and conservatives, believe that Obamacare enjoys a good long-term prognosis. That perspective is typified by Avik Roy, who assured his readers after last week’s Halbig v. Burwell ruling, “Obamacare is not on the verge of collapse.” Obviously, PPACA isn’t going to drop dead tomorrow. But Roy, like other subscribers to the wisdom of the crowd, ignores the cumulative ill effect of multiple surgeries by Congress and the courts.

Congress has already been compelled to repeal a number of Obamacare’s provisions. In April 2011, for example, it killed the notorious “1099 mandate.” This provision would have forced businesses to track and report to the IRS all purchases over $600. The law’s so-called “free choice vouchers” were also eliminated at that time. Another welcome repeal came in 2013 when the CLASS Act, ostensibly meant to provide long-term coverage for the elderly, was deep-sixed. And, in 2014, Congress got rid of Obamacare’s cap on deductibles for small group plans.

The next provision of Obamacare that is almost certain to be eliminated by Congress in the relatively near future is the employer mandate. The President has already delayed its implementation until after the upcoming midterms. Meanwhile, policy experts of all ideological persuasions have called for its repeal. Even the left-leaning Urban Institute has published a report titled, “Why Not Just Eliminate the Employer Mandate?” A better question would be: Why couldn’t the Democrats see that it was an ill-conceived, job-killing provision in the first place?

While Congress has been busy pruning provisions from the poison tree that is Obamacare, the Supreme Court has been applying the blade as well. The first major provision to be cut out of the law by that tribunal involved its Medicaid mandate. As originally written, PPACA stipulated that all states were required to expand their Medicaid programs so that they would cover everyone with incomes up to 138 percent of federal poverty guidelines. That provision was interpreted by HHS to mean that any state failing to do so would lose all its federal Medicaid funding.

This was one of the primary issues upon which the Supreme Court ruled in June of 2012. In Florida v. HHS, the plaintiffs charged that the threat to withhold Medicaid funding amounted to an unconstitutional “commandeering of the states,” legal jargon for federal infringement of state sovereignty. The Court ruled that this was indeed unconstitutional. As it was phrased at SCOTUSblog after the decision, “[T]he ACA violates the Constitution by threatening states with the loss of their existing Medicaid funding if they decline to comply with the expansion.”

Obamacare’s supporters played down that defeat and hoped the Court would ignore the additional lawsuits that had been filed against the government pursuant to the law’s numerous other violations of the Constitution. Thus, they were not happy when the Justice Department lost to Hobby Lobby in the lower courts and was forced to appeal the case before the Supremes. It goes without saying that they went completely over the edge when the Court eventually ruled against the Obama administration and the outrageous HHS contraception mandate.

Unfortunately for the supporters of “reform,” Burwell v. Hobby Lobby was not the last time they’ll have to watch the Court rule against the Obama administration on PPACA. Conventional wisdom notwithstanding, it’s a virtual certainty that the Court will take up one of the lawsuits involving exchange subsidies. The text of the law clearly states that premium assistance can only be issued via state-created insurance exchanges. Obama’s IRS, however, has illegally rewritten PPACA such that it could also grant subsidies through those created by the federal government.

Last week, the D.C. Circuit Court of Appeals ruled against the Obama administration on this exercise in bureaucratic law-making: “[T]he ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges ‘established by the State.’” On the same day, the Fourth Circuit Court of Appeals disagreed. And there are two additional challenges, Pruitt v. Sebelius and Indiana, et al. v. IRS, that are also making their way through the courts. The chances that this mess will be resolved in the lower courts are not zero, but they are close.

The conventional wisdom also holds that, if the Supremes do hear Halbig, Justice Roberts will once again cave as he did in 2012 on the individual mandate. To quote Avik Roy again, “[If] Chief Justice Roberts’ past behavior is any indication, the Obamacare challengers are in for an uphill battle.” As it happens, a less myopic look at the Roberts Court suggests the opposite. During Roberts’ tenure, and particularly during the term just ended, the justices have handed the Obama administration defeat after defeat in cases involving executive branch overreach.

The IRS subsidy cases are by no means the only challenges to Obamacare working their way through the courts. There are other serious cases involving the law’s violation of the separation of powers doctrine and the origination clause. And there are the midterms to consider. If the GOP wins back its Senate majority in November, as seems quite plausible, it isn’t likely that a Republican-controlled Congress is going stop chipping away at PPACA. It took more than six years to kill McCain-Feingold. Obamacare may not last even that long. 

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About the Author

David Catron is a health care consultant. He has an MBA from the University of Georgia and blogs at Health Care BS.