If ACA subsidies are gutted by Supreme Court, what will Ducey do?

11 Nov 2014 10:44 pm
Posted by: Donna

While many legal experts express confidence that the upcoming King v Burwell Supreme Court decision will be in favor of the Affordable Care Act, the Court did cause alarm by agreeing to hear it in the first place. Here is what is at stake:

At the heart of the King case are the tax subsidies offered by the federal government to those who cannot afford their own insurance. These subsidies are critical to achieving Obamacare’s goal of insuring even the least well off. At present, those eligible for subsidies can get them whether they purchase on the federal exchange or a state one. That could change on account of a glitch in the ACA, which can be read to say that you can only get a subsidy if you signed up on a state-managed exchange. If the Supreme Court signs off on this interpretation, the federal government cannot subsidize insurance for the less well-off in any state that has declined to set up its own exchange.

In King v. Burwell, a unanimous decision by a panel of the U.S. Court of Appeals for the 4th Circuit sided with the Obama administration, rejecting the challengers’ argument that the provision of the ACA that authorizes tax credits for insurance purchased on an exchange “established by the State under section 1311” doesn’t authorize tax credits for insurance purchased on an exchange established by the federal government. Supporters of the ACA call this a mere “drafting error.” Opponents claim this is a clear case of statutory interpretation: The law says “state” exchanges, and that is what was intended. If this interpretation prevails, more than four million people lose those subsidies.

It will be decided next June and, should a majority of Justices find for the plaintiff, Arizonans currently receiving subsidies to help them pay their insurance premiums on the Federal exchange will lose that, since our state opted out of creating our own exchange.

Governor-elect Ducey has described the ACA as a “monumental failure” and has characterized the Medicaid expansion portion of it extending coverage to adults at 138% of the federal poverty level as a “massive new entitlement” that is “now being expanded as a middle class entitlement”. Since 138% FPL is considered middle class(!) by Doug Ducey, my guess is that people earning between 138 and 400% FPL – the group eligible for subsidies on the exchange – are wealthy to him.

A key theme of Ducey’s primary and general election campaigns was resisting “federal overreach” and in a pledge to Arizona voters, he vowed, if elected Governor, to “support all efforts by our congressional delegation to repeal and replace Obamacare”, while pursuing “every available means to negotiate a Medicaid waiver for Arizona, allowing us to take care of people who genuinely need help without turning it into a vast and unaffordable new entitlement”.

Again, if “genuinely need help” is defined by Doug Ducey as having an income significantly south of 138% federal poverty level, which is around $15K for an individual and $32K annual income for a family of four, it does not bode well for him agreeing to the creation of a state health insurance exchange providing subsidies to people luxuriating with slightly higher incomes than that. This is not even taking into consideration the inclinations of the Legislature, which remains in GOP hands.

It’s possible that business and health care provider interests will again prevail upon the new Governor and some GOP legislators to do the exchange so that thousands of Arizonans will not drop off the rolls of the insured. But I’m not holding my breath that Doug Ducey, who is far more of a right wing ideologue than Jan Brewer was and is openly hostile to the ACA, would go along with that.

So hope for the best in the Supreme Court decision and be reminded, once again, that elections have consequences.

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