Author Topic: Supreme Court to opine on Obamacare tax credit  (Read 34252 times)

Gone Fishing

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Supreme Court to opine on Obamacare tax credit
« on: January 06, 2015, 01:32:06 PM »
http://www.marketwatch.com/story/the-years-biggest-tax-stories-2014-12-30

"Two 2014 Appeals Court decisions reached opposite conclusions about whether residents of states that do not operate their own health insurance exchanges are eligible for the Obamacare premium assistance tax credit. Due to this conflict between the Appeals Courts, the Supreme Court has stepped in to decide the issue, although we won’t know the outcome until next June.

My reading of the tea leaves indicates a very good chance that the Supremes will disallow the credit in the 36 states that rely on the Federal exchange because they don’t operate their own exchanges. If that happens, it will deal a potentially crippling blow to Obamacare, because health insurance that meets the Obamacare rules will be unaffordable for many folks without the tax credit subsidy. The Supreme Court’s decision will probably be next year’s biggest tax story."

Any thoughts? I am surprised this has not received more media attention. Looks like it hasn't been covered much since November.

While not crippling, this would be a significant shift in our ER plans.

Mods:

I did a search and didn't find anything directly related. If there is already a thread, feel free to link and lock.


« Last Edit: January 06, 2015, 02:32:01 PM by So Close »

Paul der Krake

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #1 on: January 06, 2015, 01:47:40 PM »
The supreme court should know better than to dismantle a law based on the ambiguous language that someone happened to discover after it was passed. Are they supposed to believe that the people in congress who voted for it were misled in who would be elible for subsidies?

Naysayers will bitch about how Obama is enforcing things that aren't in the text of the law, others will accuse them of sabotaging the middle class, and constitutional law professors will remind everybody that we don't need to spell out everything and redefine everything under the sun to write a valid law. Wah wah wah.

Eric

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #2 on: January 06, 2015, 01:55:31 PM »
I'd be surprised if the same SCOTUS that upheld the ACA as constitutional would then go and dismantle the very same ACA based on what amounts to a technicality.  Add this to the fact that I don't believe anything anyone says when prefaced by the phrase "my reading of the tea leaves" and I wouldn't worry about it.

seattlecyclone

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #3 on: January 06, 2015, 02:25:43 PM »
I think it is a stretch to say a ruling invalidating the subsidies for people on the federal exchange would "dismantle" the ACA. It would just be a strong incentive for states to implement their own exchanges, which was one of the original purposes of the law.

arebelspy

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #4 on: January 06, 2015, 02:26:08 PM »
And why can't Congress just get back together and make those other states eligible via tweaking the law?

I know, I know, Congress working together, but really... do you want to be on the side of "we don't want to make healthcare cheaper/affordable for most people" in an election year?

I don't think the ACA is getting gutted at this point, whatever has to happen.  We're past that.
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Eric

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #5 on: January 06, 2015, 03:30:28 PM »
I think it is a stretch to say a ruling invalidating the subsidies for people on the federal exchange would "dismantle" the ACA. It would just be a strong incentive for states to implement their own exchanges, which was one of the original purposes of the law.

"Dismantle" may be a little strong, but it could definitely be a big problem.  It could cause a huge drop in enrollment, as people can't afford to pay the premiums without the subsidies.  And a huge drop in enrollment combined with a perceived huge increase in premiums (because of removal of subsidies) for those staying combined with an already unpopular law doesn't really bode well.

I'm also not sure that this would incentivize the states that still haven't created their own exchanges to finally do so.  The free Federal money didn't seem to work the first time because this isn't about helping their constituents.  This is about saying Fuck You to Obama and the Democrats at the expense of their state's non-employer covered population.  I'm not sure how or why that would change now, as they'll just point to it being another problem with Big Government and Obamacare and call even louder for the dismantling of the program.

Whether that would make a difference or not, or cause specific changes to the ACA, I do not know.  Again, I don't think SCOTUS would make the ruling in the first place, so I'm not all that worried.  Either way, it could be a good excuse to scout out some areas in Massachusetts.

wardkf

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #6 on: January 06, 2015, 08:39:00 PM »
"...ambiguous language..."

Really?

"...a technicality..."

Really?

Remember, we had to pass the law to find out what was in it.  Apparently, before it was passed, no one other than Gruber was aware.  But now we all are.

If we can't rely on the plain language of the law--nothing at all ambiguous or "technical" about this--watch out for your 401(k)s and your Roth IRAs.  And anything and everything else will be at the whim of the powers that be.

Daisy

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #7 on: January 06, 2015, 09:03:48 PM »
I'm not familiar enough with the ACA, but if they remove these subsidies would there be a chance for the low cost high deductible catastrophic plans to come back? That's the kind of plan I would want anyways.

I have a vague idea from reading something on these forums that you may still have access to these catastrophic plans, but they they don't qualify for subsidies - but not sure as I haven't kept up with that discussion.

puglogic

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #8 on: January 06, 2015, 09:31:18 PM »
"Ask a Mustachian:
Do you need advice? Do you like helping others? Post your financial or life dilemma here and see if MMM or one of the other readers can help!"

What advice are you requesting with this post?  What's your dilemma?


Eric

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #9 on: January 06, 2015, 09:40:27 PM »
"...ambiguous language..."

Really?

"...a technicality..."

Really?

Remember, we had to pass the law to find out what was in it.  Apparently, before it was passed, no one other than Gruber was aware.  But now we all are.

If we can't rely on the plain language of the law--nothing at all ambiguous or "technical" about this--watch out for your 401(k)s and your Roth IRAs.  And anything and everything else will be at the whim of the powers that be.

Sound byte politics is really the best, isn't it?  You should watch less TV ward.  Do you dispute that the law was passed with the intention of having subsidies available to every person in every state who met the income limits?  Because for the end user, purchasing off of a state exchange versus a federal exchange has no discernible difference, so pretending they're somehow different because of slightly ambiguous language is indeed a technicality.  Courts decide outcomes based on intentions of lawmakers all the time, so it's not like we're breaking new ground here.

brooklynguy

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #10 on: January 07, 2015, 09:31:59 AM »
There was some discussion about this challenge to the ACA in this thread (starting at post # 160).

As I stated there (before the Supreme Court had agreed to hear the case):

"That's exactly why this ruling is so disturbing.  It paves the way for the Supreme Court to resolve the conflict that will inevitably arise when another federal appeals court rules the opposite way.  The last time Obamacare came before the Supreme Court, it passed muster only by the skin of its teeth, and that's when the entire underlying premise of subsidization of premiums was at issue.  This much narrower issue (which, as you said, effectively has the potential to destroy the ACA, since most states opted not to create an exchange) affords another opportunity to dismantle the law for those inclined to do so.  Now that the ACA is already up and running, challenging the law on this basis is an example of cutting off one's nose to spite one's face.  Hopefully cooler heads will prevail."

"Dismantle" is not too strong of a word.  This case does indeed have the potential to dismantle the law, and that is exactly what it was designed to do.

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #11 on: January 07, 2015, 12:32:35 PM »
"Ask a Mustachian:
Do you need advice? Do you like helping others? Post your financial or life dilemma here and see if MMM or one of the other readers can help!"

What advice are you requesting with this post?  What's your dilemma?

Health insurance and the available tax credits are a significant line items in my ER budget and many others as well.  Given my fast approaching ER date the outcome of this case could result in postponing ER for quite some time (>1 year) which may not seem like a big deal when one is 10+ years out, but when ER is staring you in the face, it is a big deal.  The last thing I want to do is set ER in motion then have something blow up right out of the gate.  I have been reworking budgets and formulating a contingentcy plan since I first learned of this issue yesterday, and while I could afford it, I would rather not be forced to use a large chunk of my reserve for a known expense.  Given the potential implications, I am still not sure why this has not received more media attention other than a little bit here and there. I had to discover it in a tax article after all!  Perhaps it because the media thinks it will blow over without incident, or they don't want to excite the right wingers.  I'm not sure.  Either way the case is decided, I will adapt and overcome, I simply want to be prepared.  This thread was not started to bait a political discussion, only to help me chart my ER course.  I hope this is enough of a dilemma to satisfy your requirements and I apologize for not fully disclosing all of my personal details upfront.


seattlecyclone

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #12 on: January 07, 2015, 06:28:38 PM »
"Dismantle" is not too strong of a word.  This case does indeed have the potential to dismantle the law, and that is exactly what it was designed to do.

I still think this is hyperbole. Even if the Supreme Court rules that only people in states with exchanges get subsidies, the vast majority of the law still remains in effect. Insurers will still be disallowed from rejecting people with pre-existing conditions or charging them more for premiums. People will still be required to buy into the system or pay a penalty. None of this is changing, nor does it have any real chance of being repealed.

The only thing that will change is that people in the 30-some states without their own exchanges will be required to pay full price for their coverage...at least until those states establish an exchange.

I predict many of them would do so within a year or two. The representatives in that state would realize that establishing a health insurance website doesn't cost very much at all compared to the federal subsidies that would flow into their state when they do it. Try saying "we would rather let the blue states have all the money" in an election year and see how that goes for you.

brooklynguy

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #13 on: January 07, 2015, 07:44:43 PM »
I still think this is hyperbole. Even if the Supreme Court rules that only people in states with exchanges get subsidies, the vast majority of the law still remains in effect. Insurers will still be disallowed from rejecting people with pre-existing conditions or charging them more for premiums. People will still be required to buy into the system or pay a penalty. None of this is changing, nor does it have any real chance of being repealed.

The only thing that will change is that people in the 30-some states without their own exchanges will be required to pay full price for their coverage...at least until those states establish an exchange.

I predict many of them would do so within a year or two. The representatives in that state would realize that establishing a health insurance website doesn't cost very much at all compared to the federal subsidies that would flow into their state when they do it. Try saying "we would rather let the blue states have all the money" in an election year and see how that goes for you.

If subsidies become unavailable to people in states without their own exchanges, most people in those states will no longer be required to buy into the system or face a penalty because, without the subsidies, the cost of the insurance will exempt most people from the individual mandate aspect of the ACA.  The nondiscrimination requirements applying to insurers, the individual mandate, and the premium subsidies together form the "three-legged stool" that is necessary for the ACA to properly function, and removing any of the three will have the effect of rendering the law unworkable.  This challenge to the ACA was intentionally engineered to operate as a backdoor method of dismantling the law.

Read through the dissenting judge's opinion in DC Circuit Court decision, starting on page 44 of the pdf available at this link, which makes a compelling case for why the majority decision (i) is incorrect and (ii) if upheld, will have disastrous consequences for the continued viability of the ACA.

Here are some choice quotes from the dissent:

Quote
This case is about Appellants’ not-so-veiled attempt to gut the [ACA].

Quote
As Appellants’ amici candidly acknowledge, if subsidies are unavailable to taxpayers in States with HHS-created Exchanges, “the structure of the ACA will crumble.”. . . It is inconceivable that Congress intended to give States the power to cause the ACA to “crumble.”

Quote
Simply put, [the subsidy provision of the law] interpreted as Appellants urge would function as a poison pill to the insurance markets in the States that did not elect to create their own Exchanges.

With respect to your last point, many elected representatives have already demonstrated their willingness to say "fuck you" to their constituents when it comes to the ACA when they failed to expand Medicaid coverage on the federal government's dime.  The ACA is a deeply controversial law and rationality no longer plays an integral part in the decision-making progress.

zolotiyeruki

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #14 on: January 07, 2015, 08:43:00 PM »
I've been following the Obamacare debate since its inception.  With regards to the "states without their own exchanges don't get subsidies" point, there's actually very little ambiguity.  The law was written that way quite intentionally, as a way to encourage (or, if you don't like it, "bribe" or "force") states to set up their own exchanges.  There are multiple recordings of lawmakers (and law-writers) confirming that exact point, the much-ballyhooed Gruber included.  It's not ambiguous, and it's not a mere technicality.  It's a deliberate feature of the law.

The Supreme Court is usually quite reticent (and rightfully so) to interpret laws contrary to their plain meaning.  Usually they take a stance of "if it's badly written, it's up to the legislature and executive to amend/fix it."

wardkf

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #15 on: January 07, 2015, 09:29:17 PM »
I watch very little TV, but thanks for the advice, Eric.  I'll certainly give that the consideration it's worth.

Nothing sound-bite about this; yes, I absolutely do dispute "that the law was passed with the intention of having subsidies available to every person in every state who met the income limits."  That is certainly not what the law says, and that was certainly not the intention.  The language in the law is exceedingly straightforward--nothing ambiguous or technical about it. 

What is the purpose of written law if we can't rely on written law?  Do you see no definitional difference between exchanges "established by the state" and by the federal government?  If that's not what Congress intended, Congress should have enacted a different law.  And as we all know now, one of the architects of Obamacare has repeatedly asserted  that these specific provisions of Obamacare were exactly what was intended. 

Of course, lawyers and politicians are paid to mangle the plain meaning of the English language.  And that is increasingly to the detriment of all of us, and not just with respect to our retirement savings.

DoubleDown

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #16 on: January 08, 2015, 09:24:27 AM »
I still think this is hyperbole. Even if the Supreme Court rules that only people in states with exchanges get subsidies, the vast majority of the law still remains in effect. Insurers will still be disallowed from rejecting people with pre-existing conditions or charging them more for premiums. People will still be required to buy into the system or pay a penalty. None of this is changing, nor does it have any real chance of being repealed.

The only thing that will change is that people in the 30-some states without their own exchanges will be required to pay full price for their coverage...at least until those states establish an exchange.

I predict many of them would do so within a year or two. The representatives in that state would realize that establishing a health insurance website doesn't cost very much at all compared to the federal subsidies that would flow into their state when they do it. Try saying "we would rather let the blue states have all the money" in an election year and see how that goes for you.

If subsidies become unavailable to people in states without their own exchanges, most people in those states will no longer be required to buy into the system or face a penalty because, without the subsidies, the cost of the insurance will exempt most people from the individual mandate aspect of the ACA.  The nondiscrimination requirements applying to insurers, the individual mandate, and the premium subsidies together form the "three-legged stool" that is necessary for the ACA to properly function, and removing any of the three will have the effect of rendering the law unworkable.  This challenge to the ACA was intentionally engineered to operate as a backdoor method of dismantling the law.

Read through the dissenting judge's opinion in DC Circuit Court decision, starting on page 44 of the pdf available at this link, which makes a compelling case for why the majority decision (i) is incorrect and (ii) if upheld, will have disastrous consequences for the continued viability of the ACA.

Here are some choice quotes from the dissent:

Quote
This case is about Appellants’ not-so-veiled attempt to gut the [ACA].

Quote
As Appellants’ amici candidly acknowledge, if subsidies are unavailable to taxpayers in States with HHS-created Exchanges, “the structure of the ACA will crumble.”. . . It is inconceivable that Congress intended to give States the power to cause the ACA to “crumble.”

Quote
Simply put, [the subsidy provision of the law] interpreted as Appellants urge would function as a poison pill to the insurance markets in the States that did not elect to create their own Exchanges.

With respect to your last point, many elected representatives have already demonstrated their willingness to say "fuck you" to their constituents when it comes to the ACA when they failed to expand Medicaid coverage on the federal government's dime.  The ACA is a deeply controversial law and rationality no longer plays an integral part in the decision-making progress.

+1, Excellent Post!

Our state (Virginia) is a perfect example of your last paragraph. Our Republican-controlled state legislature has given a Giant Middle Finger to accepting free Medicaid expansion dollars (to the tune of about $1 Billion) on the "principle" of not having "big government" giving free rides to poor people. In fact, the battle between the Democratic governor (McAuliffe) and the legislature on this issue became infamous and controversial (and resulted in an FBI corruption investigation) when a Democratic legislator suddenly resigned and took a fat state job offer with big pension benefits, as well as the promise of his daughter getting an appointment as a judge. The job had been promised to him by Republican leaders, and his departure (on the eve of the highly anticipated and publicized Medicaid vote) tipped the balance 20-19 in favor of the Republicans (they were previously deadlocked at 20-20), killing any chance of Medicaid expansion. It's high stakes politics on this issue and, like you said, rationality has nothing to do with it.

bugbaby

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #17 on: January 08, 2015, 09:32:16 AM »
This clearly should be under "Off Topic" thread, where people click fully prepared for political and other inflammatory type discussions

brooklynguy

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #18 on: January 08, 2015, 09:46:19 AM »
This clearly should be under "Off Topic" thread, where people click fully prepared for political and other inflammatory type discussions

I disagree.  Your comment does apply to the posts above (like zolotiyeruki's and wardkf's) that purely discuss the politics and the merits of the ACA and add nothing to the self-proclaimed purpose of this thread (assisting the OP in charting his ER course by understanding the potential implications of this upcoming Supreme Court case on his expected future healthcare expenses).  But it does not apply to the general discussion in this thread simply because politics have become entangled in the discussion.  I have zero interest in politics for its own sake, but on this topic the political headwinds have become the most relevant factor in making educated predictions about the outcome of this case and its ramifications on early retirement planning.

Cpa Cat

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #19 on: January 08, 2015, 10:35:17 AM »
Out of curiosity - Why did anyone care if states had their own exchanges? Why was that important?

I live in a state that chose not to create its own exchange and I have used healthcare.gov to shop for insurance. What difference would it make if my state had an exchange?

beltim

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #20 on: January 08, 2015, 10:53:01 AM »
I watch very little TV, but thanks for the advice, Eric.  I'll certainly give that the consideration it's worth.

Nothing sound-bite about this; yes, I absolutely do dispute "that the law was passed with the intention of having subsidies available to every person in every state who met the income limits."  That is certainly not what the law says, and that was certainly not the intention.  The language in the law is exceedingly straightforward--nothing ambiguous or technical about it. 

What is the purpose of written law if we can't rely on written law?  Do you see no definitional difference between exchanges "established by the state" and by the federal government?  If that's not what Congress intended, Congress should have enacted a different law.  And as we all know now, one of the architects of Obamacare has repeatedly asserted  that these specific provisions of Obamacare were exactly what was intended. 

Of course, lawyers and politicians are paid to mangle the plain meaning of the English language.  And that is increasingly to the detriment of all of us, and not just with respect to our retirement savings.

The word "state" in plain English also applies to countries.  The US Department of State, for example, handles diplomacy of the federal government.  The Head of State is the President.  So to say that the word "state" in a piece of federal legislation applies only to the 50 individual states but not to the country as a whole seems pretty silly.

DoubleDown

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #21 on: January 08, 2015, 11:12:16 AM »
Out of curiosity - Why did anyone care if states had their own exchanges? Why was that important?

I live in a state that chose not to create its own exchange and I have used healthcare.gov to shop for insurance. What difference would it make if my state had an exchange?

I think the primary reasons are the nature of this lawsuit itself (whether or not subsidies will be provided in state-run exchanges), and for people who earn too little to qualify for the ACA and have to rely instead on Medicaid (and states were given the authority to decide whether or not to expand Medicaid for these cases). We've ended up with a patchwork where one state provides all kinds of benefits, and others provide only the bare minimum or none if you're unfortunate enough to fall in the cracks.

Example: Virginia elected not to create their own exchange, and not to expand Medicaid. If you earn less than the minimum amount required to qualify under the ACA you are out of luck, because the state also decided not to accept Medicaid $. That is, you'd have no health coverage at all since you could not get Medicaid. If the Supreme Court upheld the lower (partial) court's ruling (doubtful in my mind but what do I know) then everyone except the wealthiest or with the best employer-provided plans would be SOL. Even middle- and higher-income earners would get no subsidies, so they'd be left paying full freight to buy mandatory coverage.

Cpa Cat

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #22 on: January 08, 2015, 11:21:15 AM »
Out of curiosity - Why did anyone care if states had their own exchanges? Why was that important?

I live in a state that chose not to create its own exchange and I have used healthcare.gov to shop for insurance. What difference would it make if my state had an exchange?

I think the primary reasons are the nature of this lawsuit itself (whether or not subsidies will be provided in state-run exchanges)...

Yes, I understand why people care now that there's a lawsuit. But why were state-run exchanges an important thing in the original law?

Some people are theorizing that the wording of the law was intentional - to punish states that did not create their own exchange. Why did the original writers of the law ever want state run exchanges? What advantage is there to their existence (as opposed to the centralized system that 30-odd states are using now via healthcare.gov)?

brooklynguy

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #23 on: January 08, 2015, 11:49:16 AM »
Even middle- and higher-income earners would get no subsidies, so they'd be left paying full freight to buy mandatory coverage.

This isn't quite right, because the effect of the DC Circuit Court's ruling is that coverage would no longer be mandatory for many (most?) middle-income earners.  The individual mandate to purchase coverage recognizes that people cannot be forced to purchase what they cannot afford and therefore has an exemption if the cost of the insurance exceed 8% of one's income.  As the dissenting opinion eloquently explains, this exemption was intentionally linked to the premium subsidies--without the subsidies, the exemption will end up applying to a broad subset of the population, which is precisely what the law was intended to avoid.  And without the subsidies to encourage broad participation in the program, there is nothing to prevent the adverse-selection death spiral that the ACA was carefully engineered to avoid, and the entire program becomes unworkable.

Cpa Cat, if you are interested in learning more about this, I suggest reading the DC Circuit Court decision I linked to above (including the dissenting opinion), which provides an excellent summary and analysis of what led to the distinction between federal and state based exchanges.

RootofGood

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #24 on: January 08, 2015, 02:23:35 PM »
I've heard about the Supreme court taking up this case, and that it could strike down the tax credits (including in my state).  Short term, the extra few hundred per month won't hurt us too bad (the kids will still be on free state children's health insurance, adults will get catastrophic or possibly go bare, go abroad, or establish residency in a state exchange state if the $$ pencils out).

As far as a workaround, I read that the states could do an end run around the interpretation if the SC rules against fed exchange tax subsidies. 

Let's use NC as an example since we have the federal exchange here.  NC sets up a "state run exchange" that's just a shell on paper.  NC State Run Exchange contracts with the fed exchange to provide all management, oversight, connectivity, and work with insurance companies to get quotes into the electronic exchange.  Fed exchange keeps on doing what it does today, just under a service contract with our official NC State Run Exchange LLC, Inc.  You could probably draft that on the back of a napkin and have the governor execute it as an executive order 10 minutes after an adverse SC opinion if the governor was so inclined. 

Let's not neglect the fact that many of the various states want to strike down ACA in its entirety (I think that's still true).  So would these states really leave their people out in the cold to prove a political point (perhaps years later) that the ACA is an untenable plan?  Maybe. 


DoubleDown

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #25 on: January 08, 2015, 02:24:12 PM »
Out of curiosity - Why did anyone care if states had their own exchanges? Why was that important?

I live in a state that chose not to create its own exchange and I have used healthcare.gov to shop for insurance. What difference would it make if my state had an exchange?

I think the primary reasons are the nature of this lawsuit itself (whether or not subsidies will be provided in state-run exchanges)...

Yes, I understand why people care now that there's a lawsuit. But why were state-run exchanges an important thing in the original law?

Some people are theorizing that the wording of the law was intentional - to punish states that did not create their own exchange. Why did the original writers of the law ever want state run exchanges? What advantage is there to their existence (as opposed to the centralized system that 30-odd states are using now via healthcare.gov)?

Brooklynguy (who clearly is well-informed on this subject!) likely gives good advice to read the court opinion for the nuanced answer. In my layman recollection of how the law and fighting over it developed, I'd sum it up as follows: Creation of the state exchanges was a "compromise" given to opponents of the ACA, who feared federal government overreach and OMG-Socialism. It met Republican's feel-good notion of "state's rights" and avoided appearance of a monolithic, bureaucratic, federal health care approach. Individual states (in theory) could craft exchanges that met their own citizens' special snowflake needs -- or what they would call "best practices." It gave red states a way to opt out of some of the things they found distasteful about the law (like Medicaid expansion).

But yeah, single payer would have been so much better and simpler.

seattlecyclone

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #26 on: January 08, 2015, 02:24:41 PM »
Thanks for pointing out the exemption in the penalties for coverage that's too expensive, brooklynguy. I hadn't considered that.

Based on the quotes the Washington exchange site is giving me, a 30-year-old man in Seattle would need an income under $25k for the cheapest plan to be over 8% of his income (and thus be exempt from the no-coverage penalty), while a 50-year-old man would need an income under $40k. This isn't a huge percentage of the population, but could be large enough to eventually lead to a death spiral, pushing more people out of the requirement to obtain coverage.

As to the question of local politics, I think that if the state officials are willing to reject subsidies for their citizens and are then allowed to keep their jobs, maybe that's just a case of the system working mostly as intended. The USA is a large place, with a large diversity of political opinions within its borders. For that reason I always thought that a single national solution to health care was perhaps misguided, because nobody really got what they wanted out of the deal. California residents might have voted for a single-payer system if given the opportunity, while Texas residents might have voted to maintain the status quo. That's okay! States are big enough that it's perfectly fine for them to have different laws in many areas, and in fact it's good for states to have this freedom. It allows us to implement different policies in different places so that we can see how well they each work in practice.

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #27 on: January 08, 2015, 02:39:48 PM »
As to the question of local politics, I think that if the state officials are willing to reject subsidies for their citizens and are then allowed to keep their jobs, maybe that's just a case of the system working mostly as intended. The USA is a large place, with a large diversity of political opinions within its borders. For that reason I always thought that a single national solution to health care was perhaps misguided, because nobody really got what they wanted out of the deal. California residents might have voted for a single-payer system if given the opportunity, while Texas residents might have voted to maintain the status quo. That's okay! States are big enough that it's perfectly fine for them to have different laws in many areas, and in fact it's good for states to have this freedom. It allows us to implement different policies in different places so that we can see how well they each work in practice.

Maybe once the poor folks understand why they don't have health insurance while their friends 10 miles away in the next state over do.  Earn under 100% of the FPL in the non-medicaid extension states and you don't get any health insurance.  So they might look at the ACA as a huge failure since they don't personally have health insurance today.  In reality, it was the politicians of that state that chose to not receive the free (for 3 years) cash money from the feds to extend medicaid.  "We" elect the politicians so we get what we deserve I guess.  There just seems to be a huge lack of information about what the ACA is and what it does and how it works.  I think there is a strong political push to continue the misinformation (at the risk of sounding political) for one political party. 

Consider asking the average uninsured adult who is under 100% of FPL why they aren't eligible for insurance.  Would you be likely to hear "my state politicians, after careful deliberation, decided to decline the extension of Medicaid and turn down free money for 3 years and 90% of the cost for the indefinite future"?  Probably not.  You might hear "Obamacare is broke".  Or "rich people always keeping us down". 

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #28 on: January 08, 2015, 03:03:22 PM »
As far as a workaround, I read that the states could do an end run around the interpretation if the SC rules against fed exchange tax subsidies. 

Let's use NC as an example since we have the federal exchange here.  NC sets up a "state run exchange" that's just a shell on paper.  NC State Run Exchange contracts with the fed exchange to provide all management, oversight, connectivity, and work with insurance companies to get quotes into the electronic exchange.  Fed exchange keeps on doing what it does today, just under a service contract with our official NC State Run Exchange LLC, Inc.  You could probably draft that on the back of a napkin and have the governor execute it as an executive order 10 minutes after an adverse SC opinion if the governor was so inclined. 

They may not even have to go that far.  Arguably, all a state needs to do to establish an exchange is set up a website with nothing more than a link to the federal exchange (for the staggering cost of a $9.95 domain name registration fee!) (see here for details).

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #29 on: January 20, 2015, 11:05:22 AM »
Consistent with the predictions made earlier in this thread, the following Wall Street Journal article discusses the fact that many politicians are already gearing up to use a potential Supreme Court ruling against the availability of tax credits in states without their own exchange as leverage to "significantly revamp" (or perhaps dismantle?) the ACA rather than enacting the simple fix in the wording of the statute that would restore the tax credits (at the federal level) or establishing state-run exchanges to protect the tax credits (at the state level).  In fact, the article says that a couple of states (Arkansas and Illinois) that had already started down the road of establishing their own exchanges are now reversing course, intentionally opting to give Republicans in Congress better ammunition to overturn parts of the law instead of protecting the tax credits for their citizens under the existing framework.

http://www.wsj.com/articles/states-stand-pat-ahead-of-supreme-court-health-law-ruling-1421367014

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #30 on: January 20, 2015, 11:48:57 AM »
Good info. Thank you, Brooklynguy.

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #31 on: February 06, 2015, 08:37:37 AM »
The following op-ed piece in yesterday's Wall Street Journal offers a peek into the kind of political gamesmanship that might be employed to leverage an adverse decision in the Supreme Court case to dismantle the ACA.  Among other things, it offers Republicans a roadmap for how to propose legislation that would perhaps both survive presidential veto and allow for the slow demise of the ACA without causing GOP governors to suffer the potential political fallback discussed earlier in this thread.

http://www.wsj.com/articles/scott-gottlieb-and-tevi-troy-how-not-to-bungle-an-obamacare-opening-1423179495

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #32 on: February 06, 2015, 07:26:53 PM »
Thanks, Brooklynguy. 

Here's a decent overview of the Hatch-Upton-Burr Republican proposal to overhaul Obamacare.  http://www.nytimes.com/2015/02/05/us/politics/gop-lawmakers-propose-alternative-to-obamacare.html?_r=0

It's not half bad honestly, but doesn't go far enough to actually overhaul our healthcare delivery system.
Here's the senators' own overview of their plan.  http://www.hatch.senate.gov/public/index.cfm/releases?ID=e2ba7198-3031-4a62-992c-42caec55f00e

In a nutshell the HUB proposed ACA overhaul would keep prohibition against discriminating against pre-existing conditions and provide some form subsidies which will probably be lower than current ACA subsidies.  However depending on how those subsidies are implemented, it might be possible to buy a bare bones policy with more narrow coverage and still receive the same subsidy.  If you can jump between coverage levels each year without penalty, this would be great (temporarily) for some individuals. 

The HUB proposal also makes it possible to pay health insurance premiums from HSAs.  Big win for those of us with $50-60k in the HSA.

My general take on the HUB proposal is that it keeps enough complexity to allow gaming the system.  Great for me, not so good for the average person. 

Another key take away from the HUB proposal is that it keeps the rough shape of ACA (subsidies, no pre-existing conditions).  There must be enough popular demand to keep the ACA relatively intact.  If that's the atmosphere in Washington (ie no one wants to propose a complete scrapping of subsidies), then good news if you're planning on FIREing and relying on ACA subsidies.  Sure, you might get a few thousand less in premiums, but you'll still get some level of certainty over healthcare spending. 

Edit to add:  I'm not so sure whether the pre-existing condition protections will truly remain in place.  In one example, they state that someone would have to undergo medical underwriting if they don't initially sign up for a healthcare plan.  Which means you, dude with a horrible pre-existing condition, would potentially pay tens of thousands of dollars per year (they can't deny coverage, but who says it has to be affordable!). 

The deregulation of "essential health care" might also mean some states might not cover basics like birth control for women ($40/yr at walmart, but hey, why prevent a $7000 pregnancy amiright?). 
« Last Edit: February 06, 2015, 07:34:19 PM by RootofGood »

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #33 on: February 06, 2015, 07:58:38 PM »
Under the HUB proposal, individuals buying their own insurance can game the system pretty easily if they are healthier than average without pre-existing conditions.  Once the underwriting becomes permissible again, all they have to do is seek a new underwritten policy and they will get a better premium than their non-underwritten plan. 

Over time, as healthy people leave the non-underwritten insurance pool in favor of cheaper underwritten policies, the premiums on the non-underwritten policies will go up year after year.  That is called adverse selection.  Eventually there won't by any real non-underwritten policies except for the least healthy that would pay huge premiums in the underwritten market. 

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #34 on: February 09, 2015, 02:40:14 PM »
RoG, I agree with your analysis and think the HUB proposal's biggest flaw is its potential for a variation of the adverse-selection death spiral that effectively gives the preexisting condition protections a limited shelf life.

The very fact that this conveniently timed, potentially viable ACA-alternative is now on the table could itself influence the justices' decision in the Supreme Court case (because even those sympathetic to the arguments of the ACA opposition may have otherwise had some reservations about massively disrupting the US healthcare system with no credible solution on the horizon).

FYI, for anyone interested, the NY Times has put together an interactive FAQ about the Supreme Court case:

http://www.nytimes.com/interactive/2015/02/03/upshot/obamacare-back-at-the-supreme-court-frequently-asked-questions.html

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #35 on: February 20, 2015, 04:05:45 PM »
Thank you for all of the info

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #36 on: May 22, 2015, 08:07:42 AM »
An editorial in yesterday's Wall Street Journal provides additional insight into the political maneuvering going on behind the scenes in anticipation of the Supreme Court decision.  The editorial basically argues that if the Supreme Court decision is a "victory" (that is, if it invalidates the ACA subsidies in states without their own exchanges), Congressional Republicans should support a temporary extension of the subsidies through August 2017 in order to avoid the political fallout that will surely result from millions of people suddenly losing affordable healthcare, but only as a transitional measure towards the true goal repealing the ACA when the next president takes office.  This way, the WSJ argues, Obama and supporters of the ACA will also be put on the defensive when they refuse to "compromise" by agreeing to a subsidy-extension that is packaged as part of an overall scaling-back of the ACA, because then they would ostensibly become the ones denying people affordable healthcare.  This editorial is actually a remarkably transparent illustration of the backhanded political gamesmanship and distortion of legal issues into political issues surrounding the ACA, and it highlights one of potentially many ways that the Republicans could be able to get away with repealing or scaling back the ACA and end up looking like the protectors of affordable healthcare for the masses.

I truly hope cooler heads prevail among a majority of the members of the Supreme Court.

http://www.wsj.com/articles/in-search-of-an-obamacare-breakout-1432250001

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #37 on: May 22, 2015, 08:12:37 AM »
Thank you for the info, Brooklyn.

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #38 on: May 22, 2015, 09:40:23 AM »
Wow, that was an interesting read. I'm willing to bet on the utter ineptitude of Congress Republicans to launch a united front to use a possible Supreme Court "victory" in their favor.

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #39 on: May 22, 2015, 10:40:07 AM »
Wow, that was an interesting read. I'm willing to bet on the utter ineptitude of Congress Republicans to launch a united front to use a possible Supreme Court "victory" in their favor.

The Republicans in Congress are very good at politics. Just look at how effective they've been in stopping everything Obama wanted to do the minute the Democrats lost the filibuster-proof margin in the Senate. The risk for the Republicans is that they have been going overboard on the ACA for 6-7 years now, and eventually people will realize how much of an improvement it is (along with drawbacks for sure) from the pre-ACA environment. If/when part/all of the ACA is repealed, they will have to manage that outrage and channel it to be against the Democrats. They've done a great job of this so far. They are pretty creative and brazen. It's interesting to watch.

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #40 on: May 26, 2015, 08:16:20 AM »
The right-leaning WSJ is now doing its part to influence public opinion as the Supreme Court decision approaches.  As if on cue (following last week's editorial), the WSJ has now released a supposedly unbiased news article in the paper proper that focuses exclusively on how the ACA has made health insurance more expensive for many Americans.  One could be forgiven for believing the paper is working in concert with Congressional Republicans to tee up the public's receptiveness to a "united front's" anti-ACA campaign in the event of a Supreme Court "victory"...

http://www.wsj.com/articles/health-costs-hinge-on-supreme-court-ruling-1432607402

forummm

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #41 on: May 26, 2015, 08:53:36 AM »
The right-leaning WSJ is now doing its part to influence public opinion as the Supreme Court decision approaches.  As if on cue (following last week's editorial), the WSJ has now released a supposedly unbiased news article in the paper proper that focuses exclusively on how the ACA has made health insurance more expensive for many Americans.  One could be forgiven for believing the paper is working in concert with Congressional Republicans to tee up the public's receptiveness to a "united front's" anti-ACA campaign in the event of a Supreme Court "victory"...

http://www.wsj.com/articles/health-costs-hinge-on-supreme-court-ruling-1432607402

Come on, Rupert Murdoch's media properties would never do such a thing.

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #42 on: May 26, 2015, 12:33:17 PM »
I haven't had the stamina to write anything detailed about this controversy (and I still don't), but I feel I have a solid understanding of the issues because aside from my general knowledge of US administrative law, I have read (i) the opinions of all intermediate appeals courts to decide the issue, (ii) the briefs of the main parties filed in the Supreme Court, and (iii) the transcript of oral argument before the Supreme Court. I have formed the opinion that the case is not legally straightforward. Basically no one in this thread has posted any legally relevant arguments. The case involves the intersection of administrative law with competing principles of statutory interpretation. To portray the case as being fundamentally political in nature is wrong, and it contributes to the myth that court cases are decided based on the judges' political leanings rather than the law.

The oral argument is worth reading if not only because it's amusing how counsel for the plaintiffs fails to come up with obvious responses to questions, such that Justice Scalia basically gives him the answer that supports plaintiffs' case, but counsel doesn't understand that Scalia is helping him and continues to miss the point for a while. The same lawyer also uses the obnoxious and incorrect phrase "IRS code".

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #43 on: May 26, 2015, 12:54:37 PM »
This all begs the question for the US health system --

We live in a country with arguably one of the worst healthcare industries in the industrialized world,  we pay the highest percentage of GNP of any country in the world - So how in hell are we going to fix this and why are we not fixing it?

The US now ranks 37th in healthcare right behind Costa Rica and just ahead of Slovenia.     

The US health system sucks.  There is no debate about that and no ruling by any court will change that.   61% of bankruptcies are attributed to inability to pay for healthcare.   It is the only business that doesn't publish rates,  charges people differing rates and doesn't compete on prices.   It is the poster child for all that is screwed up with the systems in this country and our inability to acknowledge there is a problem and to fix it.

The fact that we are now mandated by law to fund it is just obscene.  Why don't we just hire the Japanese to run this shit.  We could pay them a 3% management fee and be way ahead. 

And this just in,  congress is now figuring out that people with uber high health deductibles don't use the system.   

(http://thepatientfactor.com/canadian-health-care-information/world-health-organizations-ranking-of-the-worlds-health-systems
 http://en.wikipedia.org/wiki/List_of_countries_by_total_health_expenditure_(PPP)_per_capita
http://www.cnn.com/2009/HEALTH/06/05/bankruptcy.medical.bills/index.html?_s=PM:HEALTH



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Re: Supreme Court to opine on Obamacare tax credit
« Reply #44 on: May 26, 2015, 12:56:38 PM »
To portray the case as being fundamentally political in nature is wrong, and it contributes to the myth that court cases are decided based on the judges' political leanings rather than the law.

I don't think anyone is saying the court case will be decided on political grounds, but only that it is entangled in the larger political issues surrounding the ACA, and the political wrangling about how to employ a "favorable" outcome or how to mitigate the fallout of an "unfavorable" outcome are obviously political.  Politics are what birthed this case into being in the first place -- I'm sure you're not naïve enough to believe that the named plaintiffs brought this case to seek the specific redress of denying themselves of the subsidies that the government argues they are entitled to.  The motivation behind the case was transparently political -- a conservative, anti-Obamacare think tank engineered the case and found some nominal plaintiffs who ostensibly fit the bill to bring the case (and, as was subsequently revealed, chose poorly, given the potential defects in at least some of those plaintiffs' standing).

In any event, it's also a bit naïve to believe that no judge in any American court ever decides a case based on his or her political leanings and then reverse engineers the decision and legal analysis to match the desired outcome.  I won't go so far as to say that that's what any of the members of the Supreme Court do, but I also wouldn't argue that that's definitely not what any of them do.

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #45 on: May 26, 2015, 01:02:22 PM »
This all begs the question for the US health system --

We live in a country with arguably one of the worst healthcare industries in the industrialized world,  we pay the highest percentage of GNP of any country in the world - So how in hell are we going to fix this and why are we not fixing it?

The US now ranks 37th in healthcare right behind Costa Rica and just ahead of Slovenia.     

The US health system sucks.  There is no debate about that and no ruling by any court will change that.   61% of bankruptcies are attributed to inability to pay for healthcare.   It is the only business that doesn't publish rates,  charges people differing rates and doesn't compete on prices.   It is the poster child for all that is screwed up with the systems in this country and our inability to acknowledge there is a problem and to fix it.

The fact that we are now mandated by law to fund it is just obscene. 

The rankings that show the US healthcare system "sucking" have as part of their rankings factors like access, efficiency, and equity.  The US health care system prior to the ACA was indeed terrible on these ratings (what with not having universal coverage and all).  But the ACA is the only attempt in recent memory to actually improve the health care system on those factors - and, by bringing more people into the system, is improving along those axes.

If you only look at the quality of health care delivered, the US competes pretty well with other developed countries - not as good as Switzerland, but better than Canada or France. 

http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mirror


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Re: Supreme Court to opine on Obamacare tax credit
« Reply #46 on: May 26, 2015, 01:04:45 PM »
I haven't had the stamina to write anything detailed about this controversy (and I still don't), but I feel I have a solid understanding of the issues because aside from my general knowledge of US administrative law, I have read (i) the opinions of all intermediate appeals courts to decide the issue, (ii) the briefs of the main parties filed in the Supreme Court, and (iii) the transcript of oral argument before the Supreme Court. I have formed the opinion that the case is not legally straightforward. Basically no one in this thread has posted any legally relevant arguments. The case involves the intersection of administrative law with competing principles of statutory interpretation. To portray the case as being fundamentally political in nature is wrong, and it contributes to the myth that court cases are decided based on the judges' political leanings rather than the law.

The oral argument is worth reading if not only because it's amusing how counsel for the plaintiffs fails to come up with obvious responses to questions, such that Justice Scalia basically gives him the answer that supports plaintiffs' case, but counsel doesn't understand that Scalia is helping him and continues to miss the point for a while. The same lawyer also uses the obnoxious and incorrect phrase "IRS code".

I appreciate all your legal analysis. But I have to disagree slightly here. The Court clearly decides at least some portion of its cases based on political ideology. I think that might be a small portion of the cases. But it's more than zero. Going into some cases, any analyst can tell you how certain people will vote before the case is even heard, just based on the politics. And they will even say how it will be interesting to see them vote that way because it contradicts what they've said in opinions previously. And that's not because it always coincides with their stated "judicial philosophy".

forummm

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #47 on: May 26, 2015, 01:09:30 PM »
To portray the case as being fundamentally political in nature is wrong, and it contributes to the myth that court cases are decided based on the judges' political leanings rather than the law.

I don't think anyone is saying the court case will be decided on political grounds, but only that it is entangled in the larger political issues surrounding the ACA, and the political wrangling about how to employ a "favorable" outcome or how to mitigate the fallout of an "unfavorable" outcome are obviously political.  Politics are what birthed this case into being in the first place -- I'm sure you're not naïve enough to believe that the named plaintiffs brought this case to seek the specific redress of denying themselves of the subsidies that the government argues they are entitled to.  The motivation behind the case was transparently political -- a conservative, anti-Obamacare think tank engineered the case and found some nominal plaintiffs who ostensibly fit the bill to bring the case (and, as was subsequently revealed, chose poorly, given the potential defects in at least some of those plaintiffs' standing).

In any event, it's also a bit naïve to believe that no judge in any American court ever decides a case based on his or her political leanings and then reverse engineers the decision and legal analysis to match the desired outcome.  I won't go so far as to say that that's what any of the members of the Supreme Court do, but I also wouldn't argue that that's definitely not what any of them do.

I would say that. Again, not every case. But definitely happens.

And sometimes justices have a spouse or a son who is getting paid megabucks to advocate on behalf of organizations that come before the Court, or went hunting with someone whose case is coming before the Court. That may be part of that mix too.

forummm

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #48 on: May 26, 2015, 01:13:23 PM »
This all begs the question for the US health system --

We live in a country with arguably one of the worst healthcare industries in the industrialized world,  we pay the highest percentage of GNP of any country in the world - So how in hell are we going to fix this and why are we not fixing it?

The US now ranks 37th in healthcare right behind Costa Rica and just ahead of Slovenia.     

The US health system sucks.  There is no debate about that and no ruling by any court will change that.   61% of bankruptcies are attributed to inability to pay for healthcare.   It is the only business that doesn't publish rates,  charges people differing rates and doesn't compete on prices.   It is the poster child for all that is screwed up with the systems in this country and our inability to acknowledge there is a problem and to fix it.

The fact that we are now mandated by law to fund it is just obscene. 

The rankings that show the US healthcare system "sucking" have as part of their rankings factors like access, efficiency, and equity.  The US health care system prior to the ACA was indeed terrible on these ratings (what with not having universal coverage and all).  But the ACA is the only attempt in recent memory to actually improve the health care system on those factors - and, by bringing more people into the system, is improving along those axes.

If you only look at the quality of health care delivered, the US competes pretty well with other developed countries - not as good as Switzerland, but better than Canada or France. 

http://www.commonwealthfund.org/publications/fund-reports/2014/jun/mirror-mirror

Yes, the healthcare the US delivers is pretty good--if you can get it. It's just way more expensive than any other country. And it's not available uniformly (although the past 17 months have changed that some). A lot of the reason for the 37th ranking are things that are related to disparities in access and other things associated with poverty that are outside of the healthcare system. If you're a middle-class, educated, white mother, your baby is going to die as an infant at about the same rate as your average mom in Sweden. If you don't tick all those boxes, your baby's odds of dying can double or triple.

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Re: Supreme Court to opine on Obamacare tax credit
« Reply #49 on: May 26, 2015, 01:14:35 PM »
I haven't had the stamina to write anything detailed about this controversy

Also, I found it amusing that in the same breath that you made the quoted statement you revealed that you have probably devoted more time and attention to studying this case than anyone outside (and in some cases maybe even inside) the legal teams representing the parties :-)  You truly are an asset to this forum.