Friday, July 25, 2014

SCOTUS: Federal government can't *deny* subsidies to refusenik states?

Yesterday, I suggested that if the conservative justices of the Supreme Court wanted to uphold the D.C. ruling in Halbig, denying the federal government the right to provide subsidies to people who buy health insurance on  healthcare.gov, they might deflect reluctance to upend the law by recourse to states' rights. That is, Roberts in particular  might actually approve on principle leaving it up to the states whether to fund subsidies offered on the ACA exchanges, as he did with respect to the Medicaid expansion. By email, TNR's Brian Beutler responded:

Here's a fun thought. What if Roberts determines that an unambiguous reading of the statute denies subsidies to states that do not set up their own exchanges, but that this constitutes YET ANOTHER unconstitutional exercise of the spending power, a la the Medicaid expansion, and that the subsidies must flow everywhere.
That sounds flip, but it's actually a serious argument.  Back in July 2012, when the Halbig masterminds  floated their objections to the IRS rule stipulating that tax subsidies would flow through federally-run exchanges, health law scholar Timothy Jost wrote:
But Congress did not try to “coerce” states to create state exchanges by threatening their citizens with loss of billions of dollars of premium tax credits.  Indeed, under the Supreme Court’s recent Medicaid decision, such coercion might have been suspect.
Thus, a Supreme Court decision truly analogous to the Court's decree that the Medicaid expansion must be voluntary would be a similar decree that the federal government cannot penalize states that refuse to "establish" their own exchanges by cutting off the subsidy flow. QED, as they say at TNR.

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