Supreme Court

The Supreme Court of the United States - In case you were wondering.

The Affordable Care Act ("ACA"), otherwise known by many as Obamacare (or now SCOTUScare thanks to Justice Scalia) allows health care for people from 100% to 400% of the poverty line threshold to obtain health insurance. It generally does this through the combination of three mechanisms. (1) It prevents health insurance companies from increasing premiums for those who have certain illnesses; (2) it mandates that all people get health insurance or pay an allotted amount to the government unless it would exceed 8% of your income - which keeps premiums affordable for the poor; and (3) it grants subsidies to millions of people so that those people can then go out and buy health insurance. Mind you, this is apart from Medicaid and Medicare, which is important to understand because the people the bill is intended to serve are those that can perhaps afford health insurance but might not because it's too big of a financial sacrifice. We all want our BMW's and DirectTV. The ACA allows either an exchange, which allows insurance to be purchased and compared online, to be set up by the State or people in a state without an exchange can purchase insurance through the federal exchange. The general practice was that regardless of whether one purchased insurance through a state-based exchange or a federal-based exchange, one would receive subsidies to cover those premiums. This was challenged in King v. Burwell based on a literal interpretation of a provision in the ACA. The provision describing who was eligible for subsidies explained that people purchasing insurance through "an Exchange established by the State," which in any general context should mean just that.

The Supreme Court affirmed King v. Burwell in a 6-3 decision. What SCOTUS really affirmed was that a provision that quite literally states subsidies are for people on "exchanges established by the State," actually means not only are subsidies available to people on a state-based exchange, but to people who have purchased their insurance through the federal-based exchange. Congress read into the intentions of the ACA and figured that is what Congress meant. Of course, no one really knows whether Congress meant that or not, and frankly they probably did not or why else would they have distinctly specified the difference between exchanges set up by the state and federal exchanges (read Scalia's dissent for a very rational and coherent legal analysis). This decision either over-broadly interprets a provision or it rewards bad bill formation (maybe both) - neither of those things is generally a good thing for our legal system. Most people look at Supreme Court decisions, if they pay attention at all, and use their emotions (and whether it advances their aggregate happiness) to determine whether the outcome was good or bad. This is fine and dandy to do if you aren't a lawyer or judge, but the legal profession is supposed to be absent of most of this behavior or the system simply becomes an extension of the legislative or executive branches. If Congress wrote a bad bill, the onus is on them to amend that bill, it isn't up to the Supreme Court to use their power to vote with whatever helps shape how they feel the world should be. I feel this was taught in 5th grade social studies but yes, I guess a lot of people did go to public school, I keep forgetting that.

Supreme Court Ten Commandments

Moses holding the Ten Commandments at the top of the Supreme Court building in Washington, D.C.

King v. Burwell was affirmed by the Supreme Court, so basically nothing changes as far as health care goes, though I should have bought lots of short calls from the major health insurance players. All people eligible under Obamacare can still receive subsidies and buy their insurance through either exchange. One might wonder what type of incentives a state has to set-up their own exchange if their citizens can receive subsidies anyway. This is just a side note to think about as you digest the Supreme Court's interpretation.

If the Supreme Court reversed, this would have been very bad for everybody in the short term, at least financially, which is probably more than likely why the 6 justices that affirmed "interpreted" the text that way. Whether it would have been bad in the long run is up for debate, though generally it would have been good for more people than it would have been bad for. Lets start with insurance companies. What would a reversal have done to health insurance companies? Well, it is generally passed the point this year for insurance companies to adjust their rates which means they would have been stuck with the reserves they expected they needed while lots of their members were receiving subsidies. In a state like Nebraska, which doesn't have a state-based exchange, lots of healthy people who were receiving subsidies would have simply stopped buying insurance. The unhealthy people would have probably found a way to continue their coverage, because well, they need it. What this would have done is decrease the receivables and pretty much keep the payouts the same, decreasing the reserves. Insurance companies live and die on their reserves. If you don't know anything about CoOp Health, look them up. They received about $140 million from the federal government to set up their own insurance company that was designed to compete for the less-wealthy individuals in Iowa and Nebraska. They went belly-up in about 10 months because they priced their premiums too low and their reserves went down to nearly nothing. 

Insurance companies would undoubtedly have made up for the dip in reserves by increasing rates on the people who buy their insurance with their own money. With lots of insurance companies already limiting their in-network providers - since this is now pretty much the only way insurance companies can control their premiums - it would be harder for that to happen, to assist with any likely increase. The result, a large premium increase in the short term. A reversal would probably have become the beginning of the end of the ACA, though there was always the possibility that, at least the states that didn't submit an amicus brief on behalf of the plaintiffs, would have simply set-up a state-based exchange. There are about 7 million people receiving subsidies through the federal-based exchange, but contrary to lots of people, not all of those people would have gone uninsured had a reversal by the Supreme Court occurred. Some would have to stay on; many living in states without exchanges would have only had a limited interruption in coverage while their states set up state-based exchanges; leaving the rest of the people with the two other pieces of legislation from the ACA on their side, so premiums would generally be more reasonable for the poor then pre-Obamacare.

Self-sufficiency feels a lot better than dependency, and I want to live in a country with independent people not entitled Beemer drives who can't afford their own oil changes (or health insurance) - and yes, I know a lot of those. The truly sick and deserving should be remedied somehow (no one wants their local burger flipper infecting them with MERS), but not by the soft heart of Supreme Court justices - that type of decision making is great when you agree with the outcome, but that very same reasoning will be your first complaint when the outcome is counter. And worse yet, this is why lawyer jokes exist. If the elite judges in the country can't put emotions aside, that's probably not a good thing. I digress.