The Supreme Court’s Decision on the ACA, What Does It Really Mean?


I wanted to take a brief break in our research regarding different health care systems due to the recent Supreme Court decisions. As Betsy McCaughey stated, two weeks ago on Thursday the Supreme Court handed a victory to the most hated agency of the federal government, the IRS.  The Justices voted 6-3 that the IRS can continue to offer subsidies to ObamaCare buyers in all fifty states, contrary to what Section 1401 of the Affordable Care Act says.

The ruling puts a stamp of approval on IRS discretion to change provisions of the health law in order to make it work the way the administration wants.  It means more discretion for an agency that has targeted conservative groups, stonewalled Congressional investigators, “lost” thousands of official emails (and later, conveniently found them) and strikes fear in the hearts of Americans.

Changing the health law by fiat is nothing new.  The Obama administration has delayed, deleted, or distorted dozens of provisions. Remember the waivers for certain companies and unions, the employer mandate delays, the changed enrollment periods? The administration says they’re tweaks.

Critics call it lawlessness.  The U.S. Constitution charges Congress with making the laws and the president with seeing that they are  “faithfully executed.”

Now the fate of ObamaCare is up to the voters. Since May 1, nearly every poll shows that more than half the public opposes it.

Section 1401 of the Affordable Care Act states unambiguously that ObamaCare buyers will only get subsidies  “through an exchange established by the state.”   The subsidies were intended as a carrot to persuade states to establish exchanges.  Their residents would feel less of the sting of having to buy the pricey plans.  But surprise, only 14 states went along. The others, mostly led by Republican governors, refused. Late in the game, the administration had to establish the federal exchange (remember, the one that kept breaking down?) to get ObamaCare launched in three-quarters of the states.

Despite warnings from the Congressional Research Service that the text of the law did not permit it, the IRS handed out subsidies in those states too.

Politically, it was a no brainer. The president had promised “affordable” care. But without the subsidies, the plans are hugely unaffordable.  Some 87 percent of ObamaCare buyers get subsidies, and pay only about one quarter of the true price, on average.  John Q. Taxpayer picks up the rest. (About $22 billion this year for subsidies handed out through

Defending the IRS for playing fast and loose with the law and your money, the administration’s lawyers told the Justices that the end justifies the means. It will take the nation closer to universal coverage.   Withdrawing the subsidies, they warned, would cause a “death spiral” in three quarters of the states, with healthy consumers dropping coverage and only the sick staying in the costly, unsubsidized plans. All possibly true. But contrary to the law Congress passed.

Even Jonathan Gruber, the notorious loud-mouth MIT economist credited with designing the Affordable Care Act, is on video explaining only twenty days after the law was passed that subsidies would only be available in states that set up exchanges. In states that don’t “your citizens don’t get their tax credits.”

Too bad the Justices didn’t hear that. The administration’s lawyers lied, insisting no distinction was ever intended between state and federal exchanges.

The decision notes that whether the ObamaCare subsidies “are available on Federal exchanges is thus a question of deep ‘economic and political significance.’” The majority called the law “ambiguous.” It is not. But clearly six of the justices had their eyes more on consequences than constitutionality. They said that eliminating the subsidies in most states would “likely create the very ‘death spirals’ that Congress designed the Act to avoid.”

On the other hand Justice Scalia’s dissent argues that “words no longer have meaning if an Exchange that is not established by a State is ‘established by the State.’”

The majority decision says “a fair reading of legislation demands a fair understanding of the legislative plan,” and that Congress passed ObamaCare “to improve health insurance markets, not to destroy them.”

There’s a lesson to be taken. The 2,572-page Affordable Care Act was passed before lawmakers read it, rammed through the U.S. Senate on Christmas Eve, with then Senate Majority Leader Harry Reid threatening to keep members at the Capitol for Christmas if they didn’t support it.

The law’s size and obfuscating language endanger our freedom.  Politicians slip in exemptions for themselves, employers have to spend huge sums to have the law decoded.  And the IRS can claim the law says one thing when it says something different.  Who’s to know?

Now the fate of ObamaCare is up to the voters. Since May 1, nearly every poll shows that more than half the public opposes it. Republicans running for president all pledge to repeal it and replace it with something better. If that happens, don’t let Congress pass another unreadable monster health law.

We the people want a bill in plain, honest that our lawmakers can read before passing it and that Americans can actually decipher.

In its first five years, the Affordable Care Act has survived technical meltdowns, a presidential election, two Supreme Court challenges — including one resolved Thursday, two weeks ago — and dozens of repeal efforts in Congress. But its long-term future still isn’t ensured.

Here are five of the biggest hurdles that remain.

Medicaid Expansion

About 4 million more Americans would gain coverage if all states expand the state-federal Medicaid programs to cover people with incomes at or slightly above the poverty line. So far, 21 states with Republican governors or GOP-controlled legislatures, including Texas and Florida, have balked, citing ideological objections, their own budget pressures, as well as skepticism about Washington’s long-term commitment to pay for most of the costs.

Anemic Enrollment

Eighteen million Americans who are eligible to buy insurance in federal and state marketplaces haven’t purchased it. Those marketplaces have had particular trouble enrolling Hispanics, young adults and people who object to being told to buy insurance. Federal funding used by state marketplaces to enroll people and advertise is drying up. Many state marketplaces haven’t figured out how to be self-sustaining. Vermont, Hawaii, Colorado and Rhode Island are among those states searching for more money. The penalty for going without coverage rises next year to $695 per adult or 2.5 percent of family income—whichever is larger.

Market Stability

Nationally, premiums haven’t gone up too much on average in the first two years of the marketplaces, but that could change. The federal government has been protecting insurers from unexpectedly high medical bills, but that cushion disappears after next year. At the same time, insurers finally have enough experience with their initial customers to figure out if their premiums are sufficient to cover medical costs. If they’re not, expect increases.


People who get their insurance through their employer have mostly been spared jolts from the health law. But the federal government begins taxing expensive health plans in 2018. The “Cadillac tax,” created by the health law, will pressure employers to offer skimpier health coverage or pass the taxes’ cost on to their employees. Also, individuals buying their insurance on the health law marketplaces continue to risk large out-of-pocket costs if they need lots of care. Their maximum financial obligations for next year are $6,850 for individuals and $13,700 for families. Those who choose to go out of their insurance network may have no ceiling on how much they may have to pay.

The Kaiser Family Foundation reported in this Visualizing Health Policy infographic illustrates the change in monthly premiums by county, and select cities, from 2014 to 2015 for a 40-year-old person covered by the second-lowest-cost silver “benchmark” plan in the Affordable Care Act’s insurance marketplaces. Premium changes were greatest in Summit County, Colorado (45% decrease) and southeastern Alaska (34% increase), before tax credits. After accounting for tax credits, premiums for a 40-year-old person with an annual income of $30 000 would remain flat in most of the country, as long as the enrollee changed from the 2014 benchmark plan to the plan designated as the benchmark for 2015.


It is predicted that the premiums will rise another 30% on average. Deductibles, who knows what will happen with them and out of pocket costs. So, how affordable will Affordable Care Act take us all?

Political Resistance

Thursday’s ruling did little to diminish the GOP’s zeal to repeal the health law. Republicans on both sides of the Capitol pledged to continue their efforts to kill the ACA. A lawsuit filed by House Republicans last year alleges the president overstepped his authority when implementing the health law. The topic remains grist for the 2016 presidential campaign, with several Republican presidential candidates – including Sen. Lindsey Graham, R-S.C., and former Florida Gov. Jeb Bush — reiterating their desire to repeal the law. If the Republicans capture both the White House and Congress in 2016, all bets are off over whether the law survives intact.

Despite the recent Supreme Court ruling

upholding ObamaCare subsidies, opponents of the law remain poised to strike a key blow against another component of the health care overhaul in a matter of months.

Republicans, with help from Democrats, have gained momentum in their long-running effort to repeal the law’s controversial 2.3 percent excise tax on medical devices.

The House voted 280-140 to nix the tax, which went into effect in 2013, in June; the debate heads next to the Senate. While Republicans have tried dozens of times to unravel all or parts of the law through repeal legislation, this bill has bipartisan backing — and, with a potential veto showdown on the horizon, supporters may even have a veto-proof majority.

“Obviously, we are really heartened by the House vote — I think more significantly, 46 Democrats joined with the Republicans in the House,” said J.C. Scott, head of government relations for the trade group Advanced Medical Technology Association, of AdvaMed, which has been lobbying Congress hard for a repeal. It released surveys detailing the tax’s negative impact on its member companies in 2014 and 2015.

Scott said, “Clearly the congressional spirit is there on a bipartisan basis to get something done by the end of the year” in the Senate.

“I think the will is there,” he said.

More on this…

  • Barrasso: ‘No end in sight’ for ObamaCare costs

Indeed, Senate Majority Leader Mitch McConnell, R-Ky., wants to see action on the repeal by the end of 2015, his office told

A bill introduced in January by Sen. Orrin Hatch, R-Utah, has five Democratic co-sponsors, including the two liberal Democratic senators from Minnesota, Amy Klobuchar and Al Franken, as well as Sens. Bob Casey, D-Pa., and Jeanne Shaheen, D-N.H.

The push has enjoyed bipartisan support from the beginning from lawmakers who think the tax has cost the country thousands of jobs in the medical device industry and is drying up resources for private research and development.

“Both Republicans and Democrats understand how bad this tax really is and we owe it to the American people to ensure the development of life saving medical devices are not plagued by high costs that will, ultimately, be passed on to patients,” Hatch said in January.

The tax is supposed to help pay for ObamaCare, bringing upwards of $30 billion into the program over 10 years. It applies to all gross company sales of non-retail medical devices and supplies, from X-Ray equipment and MRI machines to bandages and surgical tools. Because it is a 2.3 percent tax on gross sales, the percentage it takes out of profits is much larger.

The repeal push once had even liberal Sen. Elizabeth Warren, D-Mass., on board when the Democrat-led Senate passed a non-binding budget amendment dealing with the issue in 2013. “When Congress taxes the sale of a specific product through an excise tax, as the Affordable Care Act does with medical devices, it too often disproportionately impacts the small companies with the narrowest financial margins and the broadest innovated potential,” she said in 2013.

It is not clear whether she is supporting Hatch’s latest bill, given she has been a strong supporter of ObamaCare overall.

But the numbers of Democrats who voted for repeal in the House, coupled with the support Democrats have shown for repeal in two previous non-binding budget resolutions in the Senate, indicate the latest bill at least has enough support to pass Congress. McConnell’s office said pro-repeal lawmakers also believe they have enough votes in both chambers to override a veto, which the White House has threatened.

Repealing the tax, the White House said in June, would amount to a “large tax break to profitable corporations.”

“This excise tax is one of several designed so that industries that gain from the coverage expansion will help offset the cost of that expansion,” said the Office of Management and Budget in a statement. “Its repeal would take away a funding source for financial assistance that is working to improve [health care] coverage and affordability and would increase the Federal deficit by $24.4 billion over 10 years.”

Supporters of the tax say there is no real evidence it is killing more than 30,000 jobs, as claimed by the AdvaMed survey, or that it will ultimately shift jobs overseas. The Washington Post’s Fact Checker gave these claims two “pinocchios” in 2014 and three on June 30 after reviewing them.

The paper said the impact of the tax on companies is actually smaller — closer to 1.5 percent — because companies can claim a deduction on their federal income taxes.

Fact Checker also pointed to a Congressional Research Service study that found the impact of the tax on jobs and R&D negligible, and pointed to another survey of medical device companies by the Emergo Group that found that nearly 57 percent said they did not make any significant staff cuts due to the tax, compared with 14 percent who did.

When asked if the tax was squeezing funds for R&D, White House Press Secretary Josh Earnest told reporters in January, “I don’t think there’s any reason why that medical device tax would in any way limit the kind of innovation that the president believes could revolutionize health care.” So, if this strategy is the only strategy for overturning Obamacare/ACA, maybe the GOP/politicians should get their act together and start considering realistic strategies.

Of all of the GOP candidates for the Presidential race the only candidate who seems to have an idea of what changes are needed or what alternative to the ACA is Governor Bobby Jindal who realizes that we need to control costs, eliminate frivolous law suits, promote health savings accounts, standardize tax deductions, etc.

My suggestion is that the next President and the next set of Congressional policymakers needs to consider how to modify the ACA so it truly benefits all without bankrupting us all.

Let me continue to explore other health care systems around the world for possible suggestions….Australia is next.

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