Thursday, July 31, 2014

Michael Cannon gives the game away

Cato's Michael Cannon, a mastermind behind Halbig, has made much of video clips in which ACA architect Jonathan Gruber seems to suggest that states that do not build their own exchanges might forgo their citizens' access to the tax credits subsidizing coverage. Gruber has since claimed that the assertion was a verbal slip, and that he probably meant to suggest (at a time when no one expected states to abstain from building their own exchanges) that a federal "backstop"  might not be in place in time for the first open season.

That's how I understood Gruber when I listened to the first unearthed clip (at minute 31). But Cannon isn't buying it. He's going for the perceived jugular,  claiming proof that the ACA's framers (with whom Gruber worked closely) intended to make the whole ACA machinery dependent on state action:
The problem with his explanations is that Jonathan Gruber doesn’t “flake.” He knows this law in and out. He knew what his words meant, with all their implications, when he spoke them. He knew the feature he was describing essentially gave each state a veto over the PPACA’s exchange subsidies, employer mandate and to a large extent its individual mandate. He knew that could lead to adverse selection. To claim Gruber didn’t know what he was saying is as absurd as saying a conductor might fail to notice that the brass section suddenly stopped playing.
As Cannon asserts, if only the state exchanges can grant subsidies, the individual mandate is all but inoperative in states relying on the federal exchange, because insurance will be unaffordable for most of the state's uninsured, exempting them from the mandate.

If that is the case, the flagship suit against the ACA's constitutionality decided by the Supreme Court in June 2012, NFIB v. Sebelius, is moot, because the ACA effectively imposes no federal individual mandate, only state ones.

The twenty six states that sued the federal government challenging the constitutionality of the individual mandate argued explicitly in their respondent's brief to the Supreme Court in HHS v. Florida that while Congress lacks the power to impose such a mandate, states do have that power:
The power to force individuals to engage in commercial transactions against their will was the kind of they reserved to state governments more directly accountable to the people (p. 17).
Massachusetts, of course, exercised that power in 2006 when it enacted the health reform law that became the prototype for the ACA. No one ever questioned the constitutionality of Massachusetts' individual mandate.

If the ACA gave the states a veto over the individual mandate, presumably the federal government would have pointed that out while defending the law's constitutionality. 

In fact a state theoretically could opt out of imposing the ACA's individual mandate -- if it did so as part of a comprehensive plan, submitted to HHS, to meet the ACA's coverage and affordability goals by alternative means. The "innovation waivers" authorized by ACA Section 1332 give states the flexibility to alter or replace (one might say "repeal and replace") virtually every core feature of the ACA's coverage scheme in an alternative scheme that provides comparable coverage and affordability. The existence of that waiver provision provides strong circumstantial evidence that Congress did not intend to enable states to opt out of providing affordable coverage via an abdication that would deny their citizens affordable coverage as defined by the ACA.

Everything Cannon claims that Gruber knew indicates the opposite of what Cannon asserts: that Gruber took it as a given that the ACA would be an incoherent, unworkable mishmash if subsidies were not available to citizens in every state.

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