Tag Archives: King v. Burwell

Health Alerts

King v. Burwell: How Important Is Obamacare’s Individual Mandate?

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HEALTHCARE LAW PROTESTS AT SUPREME COURT(A version of this Health Alert was published at Forbes.)

Later this month, the Supreme Court will likely announce its decision on King v. Burwell, the lawsuit which asserts tax credits currently being paid to health insurers in 34 to 37 states that use the federal health insurance exchange are illegal. If the Supreme Court stops these tax credits, over six million people will be required to pay the full premiums for their Obamacare policies. This will cause a crisis, which will demand a response by Congress and the president.

President Obama recently stated that, “Congress could fix this whole thing with a one-sentence provision.” True: Repealing Obamacare in its entirety would only take one sentence. However, that is not likely what he meant. Congress would have the opportunity to propose changes to Obamacare, but they would have to be signed by a reluctant president who will never again face the voters.

Now that both chambers of Congress have Republican majorities, any legislative response will surely include eliminating the individual mandate, the most unpopular feature of the law. Victory for King would make Obamacare policies in most of the country “unaffordable” and thereby relieve 11.1 million people of the individual mandate. Any “fix” that re-imposes the mandate would be political kryptonite for this Congress. Continue reading King v. Burwell: How Important Is Obamacare’s Individual Mandate? →

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King v. Burwell Update

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The range of possible political reactions to the forthcoming King v. Burwell decision, in which the Supreme Court will decide whether tax credits paid to insurers in 34 to 37 states, remains uncertain.

Sarah Ferris of The Hill reports that states are prepared to “zero in” on an “Obamacare rescue plan” if the Supreme Court turns off the spigot:

Two states — Pennsylvania and Delaware — said this week they would launch their own exchanges, if needed, to keep millions of healthcare dollars flowing after the decision. Both want to use existing pieces of the federal health insurance exchange, like its website and call center — a path that would be far less costly than the way most other states have created their exchanges.

Just two states? Reading between the lines, it is pretty clear that friends of the Administration are lobbying hard for this business opportunity. Lawyers who know more than me tell me that this approach of merely papering over the incumbent federal exchange is a risky approach, and certain to bait another, similar lawsuit.

Meghan McCarthy at Morning Consult suggests Congressional Republicans are consolidating around an approach to replace the subsidy with block grants to the affected states. I’ve had positive words for Senator Cassidy’s proposal to restore flat (non-income tested) tax credits to individuals. However, a block grant appears unlikely to earn President Obama’s signature. After all, the money would go to Republican governors. Why would the President take money that the Supreme Court prevents him from doling out to individuals and give it to Republican governors instead?

Senate Majority Leader Mitch McConnell, on the other hand, appears resigned that the President will not sign any Congressional amendment to Obamacare.

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13 Percent of Obamacare’s 2015 Sign Ups Dropped Out A Month Later

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The Administration released data on the status of enrollees in second open enrollment, which ended on February 22 (give or take a few days, depending on the state):

About 11.7 million Americans selected plans through the Health Insurance Marketplaces as of February 22, the end of the “in-line” special enrollment period for 2015 Open Enrollment for individual market coverage. On March 31, 2015, about 10.2 million consumers had “effectuated” coverage which means those individuals paid for Marketplace coverage and still have an active policy in the applicable month.

That’s a 13 percent drop-out rate within five weeks. Actually, I am happy to see if it those people got employer-based coverage, which has explained most growth in coverage over the last few years.

This shrinks the number of people who will be enrolled in health plans that will lose tax credits if the Supreme Court decides for the plaintiff in King v. Burwell. Sarah Kliff of Vox estimates it would now cost 6.4 million people their artificially low premia.

As it stands, the Administration reports that 8.7 million people are in plans that receive tax credits averaging $272 per month. That amounts to just under $30 billion annually.

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Think About the Worst Corporate Merger Ever – Then Add Obamacare

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I hate to recycle the old slight about “re-arranging the deck chairs on the Titanic,” but the latest news from state exchanges makes it impossible to avoid:

Under the Affordable Care Act, the federal government gave states a collective $4.8 billion to set up and customize their own exchanges for their own state residents. The idea was that the federal government would help prop up the exchanges, and then states would have to make them self-sustainable by this year.

However, a number of states including California and Oregon are having trouble financing their exchanges now that federal funding is drying up. Covered California, for example, is running a deficit of $80 million.

To save on costs, California is reportedly in talks with Oregon, another state struggling to afford its exchange, to merge their exchanges, The Hill first reported.

They’re not alone. Other states are contemplating building similar multi-state exchanges. New York and Connecticut are also discussing the plan, though both are in the very preliminary stages. (Brianna Ehley, “States Band Together to Keep Obamacare Afloat,” The Fiscal Times, May 26, 2015)

Continue reading Think About the Worst Corporate Merger Ever – Then Add Obamacare →

Health Alerts

Senator Cassidy Introduces King v. Burwell Alternative

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Cassidy Official Headshot

(A version of this Health Alert was published by Forbes.)

Senator Bill Cassidy (R-LA) has introduced the Patient Freedom Act, in anticipation of the Supreme Court deciding for the plaintiffs in King v. Burwell, the lawsuit that seeks to force the administration to obey the law by not paying tax credits to health plans operating in states using a federal health insurance exchange (i.e. healthcare.gov).

Victory for the plaintiffs this summer would cause significant disruption in health insurance in the 34 to 37 states without their own exchanges because premiums for up to nine million people would increase significantly. Many would choose to drop coverage if and when they have to face paying full premium for their policies.

Congress must have an alternative to Obamacare ready because President Obama will immediately propose an amendment to change the law to accord with how he is executing it. That is: Let tax credits continue to flow through healthcare.gov and just forget the money paid since January 2014 was illegal. It would be a very simple amendment – just a few sentences. The risk of Congress panicking and simply voting for that amendment, and finally surrendering to Obamacare, is unacceptable.

Americans have had their health coverage upended not only by the Affordable Care Act, but also by the allegedly illegal execution of the law by the administration. Congress has a duty to respond to a court victory with a new law. However, it has to be one that the president will sign, but will not leave the Republican-majority Congress’ fingerprints on Obamacare. This is a tricky needle to thread.

Dr. Cassidy believes he can achieve this by restoring federal funding to states that will lose tax credits, but freeing them from Obamacare. To be clear: If a state wants to restore the Obamacare tax credits, it would be free to do so by establishing a state-based exchange. However, state-based exchanges are a proven failure, which no responsible governor should institute in 2015. It would be an obvious choice to take Dr. Cassidy’s other option: Receive the federal dollars and use them in a way that empowers patients, rather than the federal government. Continue reading Senator Cassidy Introduces King v. Burwell Alternative →

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Hawaii’s Obamacare Exchange Closing After Spending $205 Million

If a tax credit falls from Washington, and no Obamacare exchange receives it, what subsidy does it make?

Despite over $205 million in federal taxpayer funding, Hawaii’s Obamacare exchange website will soon shut down.  Since its implementation, the exchange has somehow failed to become financially viable because of lower than expected Obamacare enrollment figures. With the state legislature rejecting a $28 million bailout, the website will now be unable to operate past this year. (Alexander Hendrie, Americans for Tax Reform)

This is kind of perfect storm: State-based exchanges have or will shut down, both because most of them rival the DMV for customer service and because there is no more federal money to pay for them.

On the other hand, the Supreme Court will soon issue its decision in King v. Burwell, which might terminate Obamacare tax credits in the federal Obamacare exchange, healthcare.gov.

By the end of the year, Obamacare tax credits might have nowhere to go, effectively bringing Obamacare to a halt. It will give Congress a great opportunity to re-open the health reform debate.

Health Alerts

Protecting Small Business from the Effects of Obamacare: Opportunities after King v. Burwell

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(A version of this Health Alert was submitted as testimony to the hearing, “King v Burwell Supreme Court Case and Congressional Action that can be taken to Protect Small Businesses and Their Employees,” held on April 29, 2015, by the U.S. Senate Committee on Small Business and Entrepreneurship.)

A number of independent sources confirm Obamacare is harming small businesses. According to a paper published by the American Action Forum last September, the increased burden of regulations and rising health insurance premiums have reduced pay in firms with 20 to 99 employees by at least $22.6 billion annually, and has led to 350,000 job losses. Employees who kept their jobs have seen a decrease in pay of just under $1,000 annually. Continue reading Protecting Small Business from the Effects of Obamacare: Opportunities after King v. Burwell →

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State Health Insurance Exchanges Going Bust

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From the Washington Post:

Nearly half of the 17 insurance marketplaces set up by the states and the District under President Obama’s health law are struggling financially, presenting state officials with an unexpected and serious challenge five years after the passage of the landmark Affordable Care Act.

Many of the online exchanges are wrestling with surging costs, especially for balky technology and expensive customer call centers — and tepid enrollment numbers. To ease the fiscal distress, officials are considering raising fees on insurers, sharing costs with other states and pressing state lawmakers for cash infusions. Some are weighing turning over part or all of their troubled marketplaces to the federal exchange, HealthCare.gov, which now works smoothly.

Well, whether the federal exchange “works smoothly” or not is a discussion for another day. Although, I would beg to differ with the WaPo. A more appropriate description of healthcare.gov might be that it works illegally, because it pays tax credits to insurers without any legal basis for doing so.

That is the question in the Supreme Court case King v. Burwell. If the Supreme Court decides for the plaintiff, healthcare.gov will effectively wind down (because it won’t have any more access to taxpayers’ money). With state-based exchanges failing, the future of Obamacare is in great doubt.

 

Health Alerts

Senator Johnson Introduces King v. Burwell Alternative

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Johnson2Senator Ron Johnson (R-WI) has introduced the Preserving Freedom and Choice in Health Care bill, which he frames as a response to the Supreme Court deciding for the plaintiffs in King v. Burwell. This lawsuit seeks to force the administration to obey the law by not paying tax credits to health plans that operate in states using a federal health insurance exchange (i.e. healthcare.gov).

Victory for the plaintiffs would cause massive disruption in health insurance in the 36 states using healthcare.gov because beneficiaries’ premiums would increase significantly. Up to nine million people would experience this effect.

It is necessary for Congress to have an alternative to Obamacare ready in case the Supreme Court decides in favor of King because President Obama will immediately propose an amendment to change the law to accord with how he is executing it. That is, let tax credits flow through healthcare.gov. It would be a very simple amendment – just a few sentences. The risk of Congress panicking and simply voting for that amendment, and finally surrendering to Obamacare, is unacceptable. Continue reading Senator Johnson Introduces King v. Burwell Alternative →