The Decision in King v. Burwell

As you undoubtedly know by now, the Supreme Court has ruled in favor of the defendant in King v. Burwell, the suit challenging subsidies paid to people insured under the Patient Protection and Affordable Care Act who live in states that did not set up exchanges. You’ll undoubtedly hear bickering back and forth but the PPACA is definitely the law of the land and early statements from the Congressional Republican leadership suggest that they accept that.

The good news in the Court’s decision is obvious: millions of people won’t lose their subsidies. The bad news is less obvious. One bit of bad news is that the Court has again taken it on itself to reward the Pelosi-Reid Congress for slovenly work. Don’t be surprised if at some point SCOTUS is forced to throw the Congress a brushback pitch. It can’t allow itself to become Congress’s whipping boy.

From my point of view the worst piece of news in the decision is that the lesson the Congress will learn from this is to minimize its paper trail.

Supporters of the PPACA including the Obama Administration are understandably elated at the outcome. The president’s signature piece of legislation is secure and will survive through the end of his presidency and likely beyond. I’ve already seen claims that the Court rejected a flimsy, frivolous attack on the PPACA. That’s a mistaken view that Chief Justice Roberts expressly rejected in his decision, characterizing the plaintiff’s case as a strong one. Another obvious outcome: the decision was made at least as much on policy grounds as it was on legal ones.

14 comments… add one
  • PD Shaw Link

    I actually don’t think the legislators are that stupid. I was listening to a US EPA attorney give a talk recently and he observed that all of their rules get court challenges, often from both sides. The shock that legislators expressed at this challenge was political posturing.

    The SCOTUS didn’t just find that the law was inartfully drawn, but also that because it was drafted behind closed doors outside the traditional legislative process the law lacked the “care and deliberation that one might expect of such significant legislation.” I think there was political price for that, and I don’t think it’s entirely a coincidence that there is not a”Pelosi-Reid” Congress anymore.

    I’ve not read the ACA, so have no idea about the merits of the decision, but plain meaning of specific words versus reading the words in the context of the entire statute is a classic dispute. Sometimes the plain meaning argument is more persuasive, sometimes the larger context argument is.

    But there are other consequences of a ruling that the law is ambiguous. It means that whomever is President has a lot discretion to enforce ACA as he/she sees fit. Maybe its Obamacare now, but in a few years it might be HillaryCare or Trumpcare . . .. Legislators understand this, and are usually much more careful with giving discretion to the executive.

    It also means whomever is President is going to lose religious challenges. The religious accommodation is an executive requirement, not a legislative one.

  • Guarneri Link

    “But there are other consequences of a ruling that the law is ambiguous. It means that whomever is President has a lot discretion to enforce ACA as he/she sees fit.”

    Effectively the point always made to me by my lawyers. Why have a heavily negotiated contract when with the benefit of hindsight or in the heat of the moment one wants to reopen the negotiation and argue intent?

  • jan Link

    This might be a little off-topic, but I think the latest SCOTUS rulings are indications of how the country, and now the judiciary, is blurring the constructs of not only laws but also the fundamentals of cultural standards. It seems that anything goes now in America, as long it can be legally redefined in some manner, shape or form, including the meaning of words, the historical value of irreverent symbols, all the way to gender differentiations — where qualifications are based on feelings rather than simple biology.

    Consequently, we are becoming a country with fewer and fewer social boundaries, matching the porous geographical ones we call “borders,” which are unheeded on a daily basis. Ironically, though, while state’s rights and religious mores are evolving into a societal free-for-all, the government continues to layer greater regulatory constraints molding peoples’ personal latitudes to pursue life, liberty, rights to privacy, health options and entrepreneurial quests as they see fit. For sure there is cognitive dissonance at play in how America is mutating and being “transformed,” beholding more and more to the whims and will of an intrusive, demanding centralized government than to the contours of their own character and conduct. But, does anyone care anymore?

  • steve Link

    Thanks PD. That has been my sense from reading the legal blogs. This was not really unusual, as much as both sides (for different) reasons tried to portray it as so. Reminds me of Sotomayor saying that the District courts make law. Congress passes laws with vague terms (reasonable man, undue burden, etc.) and the courts need to determine the meaning. In this case, the Court just needed to interpret based upon the meaning of the entire statute to determine its meaning. Contra the false claims noted here and elsewhere, there was never the intent to force states into the exchanges. You can find some speculation by one or two people that this might be a good idea, but none by the people who wrote it. (I would hope that Drew would understand this is different than a contract.)

    As to whether or not the ACA is working, that still depends upon your definition. However, we can dispel some bad propaganda. As Joe Flower, the darling of the right when he criticized the ACA roll out, noted, last year we saw a zero (as in nada, none, zip) increase in ACA premiums.

    “And there’s one more wild card: King v. Burwell. Its outcome will be known in the next few weeks, well after the health plans had to put in their rate requests for 2016. If the Supreme Court finds for the plaintiffs, there are many ways the result could play out. But for the states that let the federal government run their exchange — the states in which 6.5 million citizens now have subsidized health plans endangered by King v. Burwell — there is only way out that would not throw both ACA and private insurance markets into complete chaos. And that way — the Republican Congress convening instantly and passing a clean one-sentence correction to the ACA, well before the 2016 sign-up season begins — is also the least likely. So some of these health plans may well be banking extreme rate requests against that chaos. If the chaos doesn’t happen, there will be no need for extreme rate hikes.

    So in the spring of last year the supposedly leaked reports that rates were set to “skyrocket” in 2015? They were publicized by some of the very same outlets that are producing the headlines with the highest shriek quotient right now.

    I said it wouldn’t happen. Did it happen? Remember what actually happened? The final number, the nationwide average increase in premiums in the ACA exchanges? Zero.”

    We are on track for the number of people signing up that was predicted. Hospitals are actively looking at ways to reduce costs, while maintaining or improving quality. The number of part-time workers has not increased as we see the numbers of involuntary part timers has steadily decreased. So, at the very least we can say that so far, none of the bad things predicted have happened. Too early to call it a success, but no evidence of failure.

    Steve

  • Andy Link

    Hard to know what Congress intended since most voted on it in ignorance…..

    Anyway, to me this is another example of the weakness of Congress. We are used to Congress deferring tough decision to the executive, but now the SCOTUS is bailing Congress out from its own incompetence. In a normal world, the Congress would pass legislation to fix these things but the PPACA was passed with the barest majority (indeed, the change of a single Senator almost killed it, forcing the House to pass the Senate Bill without reconciliation) and thus there was no support in Congress to amend the legislation post passage. Amendment was only made more difficult given that the Democrats sacrificed their moderates (especially the Blue Dogs) in order to gain passage.

    To me the lesson here is that Congress should not force through major legislation with minimal support in Congress. In this case the SCOTUS came to the rescue to do what should have been done with the legislative process.

    As far as politicization in the court, IMO this was “political” only in the sense of the SCOTUS protecting its own legitimacy and public image.

  • PD Shaw Link

    I was amused this morning to hear Steve Ratner describe the healthcare industry as in need of consolidation and rationalization. He described the pre-ACA health care industry as like ma-and-pa operations.

    It was on CNBC, and I didn’t hear the whole thing, but I think the gist was that insurance companies have responded to the ACA by cutting benefits. That is our experience. Our premiums have dropped, as did our benefits. We had the choice of staying with our plan with a _much_ higher premium, or going to a plan with less coverage, plus a benny card. I ran the numbers on household personal expenditures over the last several years and decided reducing coverage made sense for us.

    I find these developments odd; I certainly advocated something along the lines of government-supported insurance for catastrophic or unplanned injuries. But critics wanted broad coverage for preventive care with the hope that it would prevent larger costs down the road. But when I take the kids to the doctor with a specific concern, it’s not considered preventive care, so we get hit _hard_ for something like concern over a bicycle accident.

    Anyway, to cut to the chase, I don’t believe that insurance premiums are the sum of the cost reallocations caused by ACA. I can pay to carry my immobile daughter to an urgent care facility to find out there is nothing wrong with her for what working class stiffs will make in a few weeks. Some of my wife’s co-workers were crying earlier this year when they saw their insurance policy options, and they work for a large self-insured heathcare provider that directs most of the benefits back to itself.

  • He described the pre-ACA health care industry as like ma-and-pa operations.

    He’s using the wrong analogy—retail. I think the better way to think of it is as “artisanal medicine”. The physicians’ guild is deeply commiitted to oppose it but commodity medicine is what we can afford.

    Steve likes to point to the slowing in cost increases but healthcare costs are still rising at a multiple of other costs in the economy. If healthcare were only 5% of the economy that wouldn’t be a concern but at 17%, rising towards 20, it is, especially since healthcare is so heavily dependent on tax dollars, there are lots of other demands on tax dollars, and taxes are just about at their high water mark. It will take substantial tax reform, not just nibbling around the edges, to raise enough money to pay for mass healthcare provided by artisans. And there’s substantial pushback against even nibbling around the edges of the tax system.

    I’ve published the figure before but they’re still relevant and I might dredge them out again. Illinois’s, Cook County’s, and Chicago’s problems would be vastly less if healthcare costs had only risen at the non-healthcare rate of inflation rather than at a multiple.

  • TastyBits Link

    I fail to understand why the high cost of healthcare is a problem. According to the “broken windows” and “aggregate demand” theories, this is exactly what the doctor ordered.

    There is the base amount of healthcare costs that keep up with inflation, and there is the additional portion that is the broken window or aggregate demand portion. The latter portion is not dependent upon any specific source. A Nobel Prize economist suggested preparing for an alien invasion.

    Actually, the aggregate demand from the healthcare industry is better than aggregate demand of electronic gadgets because healthcare is mostly produced by Americans. If the aggregate demand of healthcare were replaced with electronic gadgets, fewer Americans would be employed.

    To get the economy roaring, healthcare costs need to triple or quadruple, but I am sure I do not understand the theory correctly. I am sure that I have been imagining that the economic recovery is a steaming pile of sh*t. I am sure that another ten or twenty years of this crap will solve the problem.

    I found a post at Zero Hedge, but keeping up with them is a full time job.

    There’s Something Wrong With The World Today (Hint: 1995)

    It is a repost from Jeffrey Snider via Alhambra Investment Partners. The link is in the first line before the first paragraph.

  • Andy Link

    Tasty,

    If you’ve seen the movie “Demolition Man” you’ll know that in the future all restaurants are Taco Bell. Similarly, maybe in the future all jobs will be Healthcare….

  • steve Link

    Look at the actual numbers. Health care costs have usually grown 2%-3% faster than inflation. For the last few years that has dropped to about 1%. We have had a real slowing in spending on health care. The ACA was the first attempt we have had to address this and the fact that it didn’t fix it entirely in just a few years makes it a failure? Wow.

    Steve

  • steve Link
  • Don’t compare the rise in healthcare costs with the general rate of inflation but with the non-healthcare rate of inflation. A 2 percentage points greater growth is a multiple of the non-healthcare rate of inflation.

  • liberty, rights to privacy, health options and entrepreneurial quests as they see fit.

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