The Supreme Court’s decision on the availability of subsidies on the federal insurance exchange, which many states have adopted, is in and once again, as in the case of the individual mandate, the Court uses very strained reasoning to preserve the law. The Court basically acknowledges that the law literally says that the subsidy provision only applies to state operated exchanges, but then says that can’t be what Congress intended, since it would be contrary to the goal of expanding coverage. This is illogical, since at least some of the legislative history suggests that subsidies weren’t going to be available on the federal exchange to encourage states to do their own exchanges. And from a larger governance perspective, we should all fear a Supreme Court which basically strays from the written language of a law and attempts to discern legislative intent in essence by studying entrails and is likely just substituting the members of the Court own biases. Leaving that aside, if Congress had bothered at all to actually read this law before they passed it and if they had been doing their jobs and paying attention to the language on issues like this, I think they would probably have wanted the subsidies to be available to everyone. The bigger question is whose dumb idea it was to have multiple exchanges across the country; the most sensible approach would be to have one national exchange framework, populated with plan choices by geographic area.
And anyone who thinks this decision means the reform law is home free and just in great shape, is delusional. Limiting the subsidies might have done the Administration a favor by forcing Congress to rework the law. Right now, it is on course to implode. Notwithstanding subsidies, many people still aren’t getting coverage. Health spending and premiums are much higher than anticipated and just starting to accelerate. Medicaid costs are going to kill states’ budgets when they become responsible for more of the costs and the states participating in the Medicaid expansion are finally catching on to this. Most policies sold on the exchange have high deductibles and other forms of cost-sharing, which subsidies don’t help with, so they don’t lessen the financial stress on consumers. The law has done basically nothing to address the issues of health spending. Now we are seeing irrational state responses to the high cost-sharing imposed on consumers, for example, for specialty drugs. Limiting the cost-sharing only drives up premiums for everyone, making coverage even more unaffordable. As we have noted before, the problem with the reform law is the complete lack of hubris. It isn’t that there may be better solutions, although there probably are, but the failure to recognize that this poorly thought-out blob of “reform” provisions would have all kinds of unintended consequences. Some problems don’t have easy solutions or maybe any solution and it is hard but important to recognize that reality. This law is making things worse, especially for middle-income consumers, which will inevitably become fully apparent in the next few years.