Maybe, but no more than Obamacare itself has created.
The Washington, DC, Circuit Court of Appeals ruled in favor of plaintiffs in Halbig v. Burwell who claimed that clear language in the Affordable Care Act restricts federal subsidies for buying health insurance to those 14 states that created their own health insurance exchanges.
Under the ruling, 36 states that rely on the federal government’s exchange would not be eligible for those subsidies. That means millions of Americans in those states, and only those states, would get no federal help paying their premiums.
Because the ACA exempts individuals who cannot purchase “affordable coverage”—the lowest-cost policy available must be less than 8 percent of a person’s income, after any subsidies are applied—millions of middle- and lower-middle-income Americans in those 36 states would not be required to have coverage.
The coverage mandate would still apply to higher-income workers because most of them could find coverage that costs less than 8 percent of their income. But the change would not apply to people in the 14 state-created-exchange states.
Would this decision create havoc in those 36 states if the U.S. Supreme Court were to uphold the DC Circuit’s opinion? Only in the sense that access to coverage would vary by state.
In fact, the decision would essentially revert to the status quo ante. Before Obamacare went into effect there was no individual mandate to have health insurance (Massachusetts excepted) and no federal subsidies for buying it. Under the DC Circuit’s decision, there would be no individual mandate on most people in 36 states and no federal subsidies to buy it.
Moreover, the federal government just arbitrarily decided to exempt U.S. territories from the individual mandate, even though the law includes them. So if the ruling creates chaos, it’s no different than what the Obama administration has done.
The decision also undercuts the employer mandate, but the Obama administration has already postponed that for a year for large businesses and two years for medium-sized businesses—and reports say some Democrats are pushing to eliminate it completely. So no additional chaos there either.
While President Obama’s goal was to set a sort of national standard for the way health insurance was sold and operated, the administration’s sloppiness in drafting the law, determination in pushing it through without Republican support, and heavy-handedness in ignoring what it didn’t like has opened the door for federalism to flourish. That will create some differences, but that’s what federalism is all about.
July 22, 2014