ACA trouble. Appeals court rules subsidies illegal

[ziggy29]

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Originally Posted by DallasGuy I can almost guarantee that Texas will not create their own exchange. I'm screwed!

I live here too, and while I don't think they would create their own exchange in the current climate, would they use this "workaround" to use their own state wrapper around the current federal marketplace and call it their state exchange? It would cost very little and save a lot of subsidies for Texans. Like I said, would they rather explain to the people of Texas why they are paying taxes into a system that gives no money back to Texans?

[daylatedollarshort]

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Originally Posted by ziggy29 Yes, it would. And they would have to explain to their constituents why they pay taxes into the federal subsidy program without receiving any of the benefits of said taxes.

Politicians in states without Medicaid expansion are having to do that now. Federal tax dollars are being used for Medicaid expansion, but only flowing back to states that have it in place. The other states are paying for it through federal taxes and yet not getting the benefits.

[Brat]

One way to avoid this issue is for the Feds to offer states the opportunity to buy the software for their own exchange for a nominal fee.

I think the reason why Oregon's site failed is that they didn't have experienced IS project managers and tried to do too much. They bit of more than they could chew and choked on it. Washington State, being close to Microsoft software engineers, doubtless had expertise they leveraged.

[Fermion]

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Originally Posted by Brat One way to avoid this issue is for the Feds to offer states the opportunity to buy the software for their own exchange for a nominal fee. I think the reason why Oregon's site failed is that they didn't have experienced IS project managers and tried to do too much. They bit of more than they could chew and choked on it. Washington State, being close to Microsoft software engineers, doubtless had expertise they leveraged.

Not only Microsoft engineers but this area has lots of Amazon and Google software engineers as well (plus oodles of startups). Practically all of my friends are software engineers living in and around Seattle.

[AllDone]

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Originally Posted by ziggy29 This may be all that is needed -- perhaps treating each state as its own "virtual exchange" with some of its own state-specific stuff in the front end. That said, some states may refuse to do even this, especially the ones most ideologically opposed to the law.

Here's a better analysis than I could write:

Quote:

One provision of the Affordable Care Act, for example, indicates that any “exchange” shall be an “entity that is established by a State” — language which indicates that federally run exchanges will be deemed to be “established by a state.” This may seem counter-intuitive, but Congress has the power to define the words that it uses in any way that it wants, even if those words are defined in ways that are unusual. Another provision of the law provides that, when a state elects not to run an exchange, the Secretary of Health and Human Services “shall . . . establish and operate such Exchange within the State and the Secretary shall take such actions as are necessary to implement such other requirements.” Thus, the law not only authorizes the Secretary to stand in the state’s shoes when it runs an exchange, it also empowers her to implement the law’s “other requirements.” [mod edit] Source here

It's extremely unlikely that this ruling will stand when the entire court hears the case.

[Brat]

The Amazon website structure probably is the one most similar to a state insurance exchange.

Did anyone read the Time article about the talent that rescued the Fed website?

[donheff]

I think the speculation that the Feds can wrap a state logo on a Federally run exchange will not work if the DC Circuit's decision ends up being sustained by the Supreme Court. As the decision states, the ACA holds that the tax credit is available only to subsidize the purchase of insurance on an “Exchange established by the State under section 1311 of the [ACA].” Section 1311 already provides that if a state refuses or is unable to set up an Exchange, the federal government, through the Secretary of Health and Human Services (HHS), “shall . . . establish and operate such Exchange within the State.”If "such exchange" is not already a qualifying exchange I doubt the courts will allow some logo legerdemain to get around the problem. This is especially true since the court found that along with authorizing the subsidies the IRS rule imposes ACA mandates and penalties that would not apply if "such exchange" is not viewed as a qualifying exchange.

This one could be a bigger problem than I expected.

[samclem]

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Originally Posted by donheff I think the speculation that the Feds can wrap a state logo on a Federally run exchange will not work if the DC Circuit's decision ends up being sustained by the Supreme Court.

But if a state now wants to have an exchange, and if the feds already have one up and running for that state, why couldn't the code be transferred and the $$ to run the thing transferred as grants form HHS? Or, easier yet, the states "run" their exchanges by paying a very nominal fee to the federal government to have their contractors do it?
If there is a desire in DC to meet the letter of the law, and if the states want to meet the letter of the law (because of constituent pressure), I just don't think the courts will get into the details to assure the exchanges are "statey" enough. Once the Feds and the state declare the thing to be a state exchange, it will be accepted as such.

I just don't think this will be the thing that kills the construct set up by this law.

[ziggy29]

Quote:

Originally Posted by samclem But if a state now wants to have an exchange, and if the feds already have one up and running for that state, why couldn't the code be transferred and the $$ to run the thing transferred as grants form HHS? Or, easier yet, the states "run" their exchanges by paying a very nominal fee to the federal government to have their contractors do it? If there is a desire in DC to meet the letter of the law, and if the states want to meet the letter of the law (because of constituent pressure), I just don't think the courts will get into the details to assure the exchanges are "statey" enough. Once the Feds and the state declare the thing to be a state exchange, it will be accepted as such. I just don't think this will be the thing that kills the construct set up by this law.

I tend to agree. There seem to be any number of ways to substantially use the existing infrastructure in a way that minimally turns the federal exchange into a number of virtual state exchanges, just enough to pass the "smell test" to consider them state exchanges. And some of them don't require any further Congressional action.

[donheff]

Quote:

Originally Posted by samclem But if a state now wants to have an exchange, and if the feds already have one up and running for that state, why couldn't the code be transferred and the $$ to run the thing transferred as grants form HHS? Or, easier yet, the states "run" their exchanges by paying a very nominal fee to the federal government to have their contractors do it? If there is a desire in DC to meet the letter of the law, and if the states want to meet the letter of the law (because of constituent pressure), I just don't think the courts will get into the details to assure the exchanges are "statey" enough. Once the Feds and the state declare the thing to be a state exchange, it will be accepted as such. I just don't think this will be the thing that kills the construct set up by this law.

I agree with what you say f the state wants to work with the Fed. I suspect they can fairly easily work around the problem in that case. I think that may apply to about 1/3, maybe even 1/2, of the states not operating their own exchanges. The rest will laugh as the subsidies disappear. They don't want the Feds paying for Medicaid, they won't want them paying for subsidies. And along with the subsidies would go employer mandates and penalties. Those blows to Obamacare will be irresistible to states that strongly object to it. We already have health care have and have not states -- if sustained, the DC Circuit analysis would make that an order of magnitude worse.

[DavidC]

Quote:

Originally Posted by ziggy29 I tend to agree. There seem to be any number of ways to substantially use the existing infrastructure in a way that minimally turns the federal exchange into a number of virtual state exchanges, just enough to pass the "smell test" to consider them state exchanges. And some of them don't require any further Congressional action.

Until such a "fix" were put into place it's a real possibility that federal subsidies will be ruled illegal and have to be returned. If I were getting federal subsides I'd be budgeting for that. And I'm not of the opinion that this "fix" would be ruled legal either and it would surely be challenged.


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[aaronc879]

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Originally Posted by DavidC Until such a "fix" were put into place it's a real possibility that federal subsidies will be ruled illegal and have to be returned. If I were getting federal subsides I'd be budgeting for that. And I'm not of the opinion that this "fix" would be ruled legal either and it would surely be challenged. Sent from my iPad using Early Retirement Forum

I don't think very many of the people who qualify for significant subsidies are people who can return the money.

[DavidC]

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Originally Posted by aaronc879 I don't think very many of the people who qualify for significant subsidies are people who can return the money.

True but irrelevant. The US Government will have a fiduciary responsibility to collect what was illegally dispersed.


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[aaronc879]

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Originally Posted by DavidC True but irrelevant. The US Government will have a fiduciary responsibility to collect what was illegally dispersed. Sent from my iPad using Early Retirement Forum

I wouldn't have gotten insurance if it wasn't for the significant subsidy. I won't be paying any more than what I was told I owe at the time that I signed up.

[samclem]

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Originally Posted by donheff The rest will laugh as the subsidies disappear. They don't want the Feds paying for Medicaid, they won't want them paying for subsidies. And along with the subsidies would go employer mandates and penalties. Those blows to Obamacare will be irresistible to states that strongly object to it. We already have health care have and have not states -- if sustained, the DC Circuit analysis would make that an order of magnitude worse.

I can see how the individual mandate would go away in many cases (because if the person's income isn't high enough, the coverage is deemed "unaffordable," and the law allows individuals to avoid the tax, penalty, whatever). Would the corporate mandate also go away just because the subsidies can't be legally paid?

[pb4uski]

Isn't the political reality that subsidies are so popular to those who receive them and are not sufficiently unpopular to those who don't receive them that the politicians of both stripes will find some way to either change the law (retroactively if needed) or change the structure so people receiving subsidies will not have them cut-off or have to pay them back? It just seems to me that the political repercussions are so severe that no politician in their right mind would get anywhere close to them, particularly in an election year. Just trying to keep it real.

[pb4uski]

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Originally Posted by DavidC Until such a "fix" were put into place it's a real possibility that federal subsidies will be ruled illegal and have to be returned. If I were getting federal subsides I'd be budgeting for that. And I'm not of the opinion that this "fix" would be ruled legal either and it would surely be challenged. Sent from my iPad using Early Retirement Forum

That's crazy talk. No way the politicians will allow that to happen. Besides, you can't draw blood from a stone.

[samclem]

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Originally Posted by pb4uski Isn't the political reality that subsidies are so popular to those who receive them and are not sufficiently unpopular to those who don't receive them that the politicians of both stripes will find some way to either change the law (retroactively if needed) or change the structure so people receiving subsidies will not have them cut-off or have to pay them back?

I think that has been the hope behind a lot of this law from Day 1.

As long as the money comes from "somewhere else," the reality is that people will always want more of the free stuff. It's a "tragedy of the commons" situation: In general, no one worries about carefully spending a resource that is supplied by others.

So, restrictions on the subsidies are probably not a realistic threat to the construct established by this law. The real threat to the construct would be allowing people to opt out of paying for the benefits provided by the legislation if they, personally, don't want the benefits provided by the legislation. There's no Constitutional rationale for a challenge like that, because the Constitution, as presently interpreted, provides weak protection for personal property rights.

[FUEGO]

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Originally Posted by pb4uski So the states just "subcontract" the running of their exchange to the feds.........problem solved with a simple contact. I'm not even sure if you need a front end unique to the state in that case since a resident will select the state they reside in at the start of their websurfing.

That was my thinking - each state licenses the federal exchange to be used in their state. Stick a *.jpg file in the banner of the page for your state's specific site, and boom, done.

[aaronc879]

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Originally Posted by pb4uski Isn't the political reality that subsidies are so popular to those who receive them and are not sufficiently unpopular to those who don't receive them that the politicians of both stripes will find some way to either change the law (retroactively if needed) or change the structure so people receiving subsidies will not have them cut-off or have to pay them back? It just seems to me that the political repercussions are so severe that no politician in their right mind would get anywhere close to them, particularly in an election year. Just trying to keep it real.

As long as they don't say we owe back money on the subsidies we already got. If they want to cancel future subsidies then that's fine. As long as we know what we're getting into when we sign up for a plan.