In case you missed the troubling news about the Affordable Care Act (ACA) earlier this week, two federal appeals courts delivered conflicting rulings on, as Rewire‘s Jessica Mason Pieklo described it, “whether or not the text of the [ACA] allows the federal government to subsidize insurance premiums in its federally run exchanges.”
On Tuesday morning, in Halbig v. Burwell, a panel of the U.S. Court of Appeals in Washington, D.C. ruled that the IRS can no longer give tax subsidies to people purchasing insurance through the ACA in states with federally run exchanges.
With the federal government running the exchanges (sometimes referred to as online marketplaces) in 36 states, the ruling, if not reversed, could affect most of the country.
Only a few minutes after the Halbig ruling in D.C., the U.S. Court of Appeals in Richmond, Virginia, concluded in King v. Burwell that the IRS does have the right to give tax subsidies to all Americans who purchase their health insurance through the federal exchange.
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At issue, essentially, is the letter versus the intent of the law. The D.C. ruling concluded that the ACA “unambiguously restricts” the subsidies to exchanges established by states. Some liberals called it “a drafting error,” which conservatives immediately dismissed as a canard. The Obama administration called it “a partisan attempt to harm the Affordable Care Act” and is appealing the decision.
In the meantime, while everyone argues over what will happen if the issue makes its way to the Supreme Court, there’s another question: What does this mean politically?
While Democratic strategists have suggested that it’s “wishful thinking” to believe Halbig can move the needle on fall elections, the issue could gain traction in Pennsylvania, where Republican Gov. Tom Corbett has practically made a career out of partisan attempts to harm the Affordable Care Act.
Corbett, who was swept into office in the red rush of 2010, is the most vulnerable governor in the country, according to most analysts. Recent polls show challenger Tom Wolf with a 21-point lead—though that’s likely to winnow closer to the November election.
“If they’re going to put this out of reach [for Corbett],” Democrats “have to define him before the fall campaign,” J. Wesley Leckrone, a political science professor at Widener University said recently.
Corbett has done most of that job by defining himself as a governor willing to sacrifice the health care of Pennsylvanians to pursue an anti-ACA ideology so pure that he is even losing the support of Republican lawmakers.
His campaign against the ACA stretches back to 2010, when, as attorney general, he filed an unsuccessful suit against the law. As governor, Corbett refused to set up an exchange.
Despite the urging of health advocate and policy experts, Corbett has steadfastly refused to expand Medicaid in the state, losing out on millions of federal dollars and 35,000 jobs while leaving 500,000 Pennsylvania residents without insurance. This spring, a coalition of 130 health advocacy and policy organizations pushing for Medicaid expansion switched gears and made a fiscal plea, pointing out that expanding Medicaid, even temporarily, would help slash the state’s disastrous budget shortfall. At that point, even some Republicans considered Medicaid expansion on the table.
Corbett refused. Instead, he signed a budget that includes a supposed $125 million in savings based on the precarious assumption that Healthy PA, his much-criticized proposed alternative to Medicaid expansion that cuts benefits of current enrollees, will be approved by the federal government. Along the way, he managed to further alienate his own base: State senate Republicans are even considering suing Corbett, for a line-item veto he made to the legislature’s budget, which they believe may be unconstitutional.
Health-care access for Pennsylvanians continues to be a sharp political point in the state. Just this week, the Corbett administration announced it would relent on slashing benefits for a program that provides assistance for 33,000 disabled ow- and middle-income residents.
On top of all that, back in 2011 Corbett signed a law to regulate abortion clinics as ambulatory surgical centers, which led to the closure of six clinics in the state. In April, the Pennsylvania legislature also proposed to regulate “navigators”—people hired to help citizens figure out how to sign up for insurance under the ACA—out of existence. If that bill gets signed into law (that is, if it’s not illegal altogether) Pennsylvania’s most effective navigator organization would be disqualified from helping people get insurance.
Enter Tom Wolf, the York businessperson who is Corbett’s Democratic challenger this fall. Wolf has already said that if elected, he will expand Medicaid. He is pro-choice. He has promised to take “an active, aggressive role in expanding access to health care in Pennsylvania.”
It is reasonable, then, to believe that Wolf could leverage the specter of the Halbig ruling to hammer home that point, while simultaneously hitting the note established in his first Corbett attack ad, in which he says the middle class cannot “afford” Tom Corbett.
(Wolf did not return a request for comment.)
There are already 500,000 people stuck without insurance because of Corbett’s policies. Of the approximately 318,000 Pennsylvanians who signed up for insurance through the ACA, about 81 percent currently receive subsidies. As the Allentown Morning Call recently reported, “the final outcome of the [Halbig] issue has the potential to affect even more — the federal government estimated in May that 333,000 people across Pennsylvania would qualify for subsidized coverage.”
That’s nearly a million people with an immediate reason not to vote for Tom Corbett this fall.
Experts have argued that even if Halbig stands, a willing governor of a state with a federally run exchange could work around the ruling to restore their constituents’ subsidies. As Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation, tweeted this week:
Lots of ways the federal government could make it easy for states to set up exchanges. But a governor would still have to WANT to do it.
— Larry Levitt (@larry_levitt) July 22, 2014
According to University of Michigan law professor Nicholas Bagley, a governor interested in restoring subsidies would establish a state-based entity that could “then contract with Healthcare.gov to operate the exchange. On the ground, nothing would change. But tax credits would be available where they weren’t before.”
Corbett has branded himself as willing to risk almost anything to work against the Affordable Care Act. It will be interesting to see if that includes a second term.