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Don’t sweat that court ruling on Obamacare tax credits just yet

It’s too soon to say what effect, if any will be felt in Texas.

It's constitutional - deal with it

It’s constitutional – deal with it

Opposing rulings from two federal courts Tuesday left unclear the future prospects of federal financial aid to Texans who qualify for assistance to purchase health insurance under the Affordable Care Act.

The U.S. Court of Appeals for the D.C. Circuit ruled that the ACA legislation made federal subsidies available only to individuals who purchased insurance through state-run exchanges. That would make federal subsidies illegal in the 36 states, including Texas, that use the federally facilitated insurance marketplace.

That announcement was followed by a decision from the 4th Circuit Court of Appeals in Virginia, which ruled that individuals who enroll using federally facilitated exchanges are eligible to receive subsidies.

Texas, like dozens of other states with Republican leaders, declined to create its own state-based insurance exchange under the ACA. Instead, Texas relies on a federally managed marketplace. More than 730,000 Texans enrolled for health coverage through the federal marketplace during the first period of open enrollment.

[...]

Individuals whose annual incomes range from one to four times the federal poverty level — $11,490 to $45,960 for an individual and $23,550 to $94,200 for a family of four — typically qualify for the subsidies.

Christine Sinatra, state spokeswoman for Enroll America, which has worked to enroll individuals in the federal marketplace, said the availability of financial assistance was “obviously a big factor” for that encouraged many in Texas to get insurance.

“What’s most important at this stage is for consumers to know that no one will lose their coverage or their financial help while this judicial process plays out,” Sinatra said. “And today’s decision isn’t making anyone newly uninsured.”

As noted in the story, some 734K people signed up for insurance via the federal exchange, and they generally got a good deal when they did. Put that aside for now, because as Josh Marshall suggests, the en banc reviews are likely to result in both courts agreeing, in which case there’s no dispute for the Supreme Court to resolve. But they could still take the case, or maybe something goes sideways with the en banc reviews. What happens if the adverse ruling is ultimately upheld? Kevin Drum suggests one possibility.

The key point here is that people respond much more strongly to losing things than they do to not getting them in the first place. For example, there are lots of poor people in red states who currently aren’t receiving Medicaid benefits thanks to their states’ refusal to participate in Obamacare’s Medicaid expansion. This hasn’t caused a revolt because nothing was taken away. They just never got Medicaid in the first place.

The subsidies would be a different story. You’d have roughly 6 million people who would suddenly lose a benefit that they’ve come to value highly. This would cause a huge backlash. It’s hard to say if this would be enough to move Congress to action, but I think this is nonetheless the basic lay of the land. Obamacare wouldn’t be destroyed, it would merely be taken away from a lot of people who are currently benefiting from it. They’d fight to get it back, and that changes the political calculus.

Six million people nationwide, 734,000 in Texas. Remember, while it would take Congress to fix the national problem if it comes to that, there’s nothing stopping Texas or any other state from setting up their own exchange, as the law (as interpreted by two federal judges in Washington, DC) says. State Rep. John Zerwas tried to pass a bill in 2011 to establish an exchange in Texas, on the very reasonable grounds that a state-run exchange would be a better fit than a national one would. Sadly, though not surprisingly, it went nowhere, thanks in large part to Rick Perry’s fanatical opposition. My point is that if Drum is right then any pressure on Congress to fix this would also translate to the state Legislature. Who knows what effect that might have in 2016, or even 2018? Or for that matter, how about this year, too? Seven hundred thousand people losing something that they now have, that sure is a lot. Surely there’s something we can do with that.

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