Today brings the latest report from Politico regarding the concerns of states that chose to implement President Barack Obama’s health care law. The major concern: If the Supreme Court rules against the mandate alone, these states could be caught at a major competitive disadvantage. The expected response? Intense pressure from insurers to pass state-level individual mandates:
A Supreme Court ruling striking down the federal mandate wouldn’t take away states’ power to enact one. The challenge to the health care law contends that Congress overstepped its power under the Constitution’s Commerce Clause. But no one is challenging whether states have the power to put in place a mandate on their own, as Massachusetts did in 2006.
“The obvious fix” is to follow the Bay State’s example, said Alan Weil of the National Academy for State Health Policy.
The pressure from insurers could up-end health politics in states that have been on the fence about moving ahead with health reform, suggested George Mason University’s Len Nichols, who is advising the administration of Virginia Gov. Bob McDonnell. The state has laid the groundwork to set up an exchange even though it has opposed the law in court.
“I think insurers are the lobby to concentrate [state lawmakers’] minds,” Nichols said.
A ruling just against the individual mandate may make it harder for state lawmakers to stay on the sidelines of implementation. HHS would lack the power to fix the imbalance in insurance industry by regulation, and Congress could easily deadlock over reforming or repealing the health reform law.
States that chose to rush ahead with the implementation of the law face significant and negative ramifications should the Supreme Court make such a decision. And a mandate isn’t the only issue – states like Oregon and Vermont, which have based their exchange-plus reforms on the assumption of millions of dollars in federal taxpayer funding that may never materialize, could find themselves facing billion-dollar shortfalls in just a few short years.
For states that chose not to implement, this is just one more reason to hold back – particularly if you agree with the legal scholars who hold that Obama’s law doesn’t authorize tax credits or subsidies in federal exchanges. As our friends at Cato noted earlier:
This is where the glitch comes in: ObamaCare authorizes premium assistance in state-run exchanges (Section 1311) but not federal ones (Section 1321). In other words, states that refuse to create an exchange can block much of ObamaCare’s spending and practically force Congress to reopen the law for revisions.
The Obama administration wants to avoid that legislative debacle, so this summer it proposed an IRS rule to offer premium assistance in all exchanges “whether established under section 1311 or 1321.” On Nov. 17 the IRS will hold a public hearing on that proposal. According to a Treasury Department spokeswoman, the administration is “confident” that offering premium assistance where Congress has not authorized it “is consistent with the intent of the law and our ability to interpret and implement it.”
Such confidence is misplaced. The text of the law is perfectly clear. And without congressional authorization, the IRS lacks the power to dispense tax credits or spend money.
The IRS has since held hearings about the matter, but no resolution has happened yet. And while the administration maintains they can fix this problem via regulation, the Joint Committee on Taxation disagrees. Since the text of the law clearly does not clearly authorize it, the matter would have to be litigated later on should the Supreme Court strike down the individual mandate alone … providing yet another problematic delay for states that rushed ahead instead of waiting for the courts to sort things out. Patience, it turns out, has its rewards.
