Tags: Healthcare Reform | Obamacare | healthcare | court | subsidies | exchanges

Vox: Obamacare Legal Bombshell Based on Badly Written Legislation

By Drew MacKenzie   |   Tuesday, 22 Jul 2014 12:58 PM

The decision by a federal appeals court that threatens the future of Obamacare is based on poorly written legislative language, according to Vox.

The ruling, issued Tuesday by the U.S. Court of Appeals for the District of Columbia Circuit, states that the government can't give financial assistance to individuals buying healthcare coverage on the insurance marketplace run by federal authorities.

The Halbig v. Burwell suit, if upheld on review, argues that according to the text of the Affordable Care Act, subsidies should only be available in states that set up new insurance exchanges.

But 36 states joined the federal exchange, meaning that people who have received subsidies to purchase health insurance in that exchange, HealthCare.gov, will no longer be getting the subsidies under the new ruling.

"Due to what appears to many outside observers to have been poorly crafted legislative language, Congress arguably wrote a sentence that provides subsidies exclusively to state-based exchanges and not to federally facilitated ones, even while subjectively intending to provide subsidies in both cases," wrote Vox’s Adrianna McIntyre.

"The government might be hesitant to argue that this lawsuit is premised on an error in how the law was drafted because it's possible that the court would hold the government to the text of the law — even if that text is flawed and contrary to Congress' original intent — so, framing it as an 'error' could result in losing the suit."

The plaintiffs will argue that Congress deliberately established the subsidies as an incentive for the creation of state-based exchanges, while the government claims that the text of the law simply does not limit the subsidies to state-based exchanges, Vox reported.

The reason that the ruling could result in the demise of Obamacare is that 87 percent of the 5.4 million individuals enrolled in the federal exchange receive subsidies, making their health insurance under Obamacare affordable. According to recent statistics from the Robert Wood Johnson Foundation, 7.3 million people will receive federal subsidies in 2016.

Without the subsidies, the Affordable Care Act would too costly to millions of Americans, leading to a potential "death spiral" that would end with Obamacare eventually crashing and burning, according to Vox.

The system would go into a tailspin because healthy, younger people would opt out of taking expensive health insurance plans and pay a fine instead, while other people who are older and sicker will keep their plans. They would be expensive to insure, and thus their premiums would likely skyrocket.

The government has consistently maintained that it needs younger, healthier enrollees to keep premiums low and make the program viable.

The ruling was delivered by three judges on the D.C. Circuit court, Vox said. But the federal government will probably ask the entire court of 11 judges to review the decision "en banc." There are seven Democratic appointees and four Republican appointees on the bench.

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