First, Last, and Always, Obamacare is About Politics


With the Obamacare website slowly but surely becoming more usable, attention is now turning toward other challenges standing in the way of the law. In particular, there are two significant legal challenges now working their way through the courts: one about the contraception mandate and another one arguing that subsidies can be offered only in states that run their own exchanges. The contraception case is important in its own right, but doesn’t really pose an existential problem to the law itself. The subsidy case might.

Here’s the nickel summary: The text of the Affordable Care Act states that taxpayers are eligible for subsidies if they buy a health plan via “an Exchange established by the State under section 1311.” But Section 1311 is the one that sets up state exchanges, and there’s no similar language for the federal exchange, which is set up under Section 1321. So conservatives are now arguing that this means subsidies aren’t available to anyone in the states which are served by the federal exchange. The IRS doesn’t agree, and has issued a rule saying that subsidies (actually tax credits) will be available to anyone who buys a plan from any exchange.

The legal arguments about this are extensive, and I’m going to skip them for now. If you’re interested in more detail, you might check out this post from Tim Jost making the case that Congress clearly intended subsidies to be available everywhere, and this rebuttal from Michael Cannon and Jonathan Adler. They’re a year old, but nothing much has changed since then.

Instead, I want to muse a bit about a few aspects of this issue that aren’t narrowly legal in nature:

  • The Supreme Court has always been a politicized body, but my take is that over the past decade it’s become almost completely politicized. In big cases, the justices simply decide what result they want and then write language justifying it. For that reason, I suspect that the purely legal arguments here don’t matter very much. (Yes, this is a very cynical position. But I think it’s pretty close to true.)
  • There’s a sense in which Chief Justice John Roberts “owns” Obamacare, since he was the swing vote that ruled it constitutional last year. Given this, how likely is it that a mere year or two later, he’ll be willing to cast a vote that cripples the law? Sure, this time around the legal case is different, but it still boils down to the same basic question: will the law go forward? Having already ruled once that it can, I’m not sure he’ll be open to letting opponents take a second bite at the same apple. Stripped to its core, conservative lawyers are pressuring Roberts to admit that he was wrong in 2012, and I’m not sure he’ll be willing to cave in to that pressure.
  • This case won’t be heard by the Court until at least 2015. This means that Obamacare will already be in effect and people will already be receiving subsidies. I think this makes it even less likely that Roberts will vote to essentially overturn the law.
  • Still, suppose he does. Would it, in fact, cripple the law? Or would we end up with Obamacare being available only to about half the country? This is a trickier question than it seems. In the non-subsidy states, a couple of things would be going on. First, a lot of the provisions of Obamacare would still be in effect: community rating, guaranteed issue, the individual mandate, etc. Having all these in place without the subsidies might be bad news for insurers, which means the insurance industry could start putting real pressure on holdout states to set up their own exchanges. Second, there would be a whole lot of people who had gotten subsidies the year before and were now having them yanked away. Taking existing benefits away generates far more passion than refusing to approve benefits in the first place, and eliminating the subsidies could end up generating irresistible public pressure to set up state exchanges in order to put them back in place. Put these two things together and you have a lot of pressure to set up state exchanges in the states that don’t have them.
  • There’s another moving part here too: if Obamacare were available to some states but not others, it means that lots of citizens would be barred from receiving a government benefit even though they’re paying some of the taxes for it. How long will they put up with this? This question also applies to all the states that have refused the Medicaid expansion—but, to put it bluntly, it’s a bigger issue with the subsidies because a lot of people getting subsidies are middle-class. And the plain fact is that legislators pay a whole lot more attention to pissed-off members of the middle class than they do to pissed-off poor people.

I’m tossing all this out for conversation more than anything else. I’m not committed to any of it, though they all seem like reasonable positions to take. Mostly, though, I just want to point out that even in court cases, politics probably plays at least as big a role as legal wrangling does. It would be a mistake to think of this solely in narrow legal terms without acknowledging the real-world pressures that provide the ultimate context for its resolution.

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