We have arrived at another divisive debate about the future of Americans’ access to health insurance and health care services and our ability to protect it. And no one can claim that the recent election provided a mandate for a specific path forward. With the flood of news about 2017 exchange pricing and Republicans working on how they can make good on their vows to repeal and replace the Affordable Care Act (ACA), now is a good time to examine “what might have been” in light of “what is” regarding our nation’s health care insurance and delivery system.
The reality is unspeakably ugly—skyrocketing premiums, disappearing competition, enormous unbudgeted federal spending on the exchanges, and unappreciated second-order effects like large increases on the group market (where most people obtain health care coverage) and rising small employer costs. These rising costs depress hiring, economic growth, and overall worker prosperity.
The blame is cast in various directions: President Obama, Congress—specifically, House Republicans who have stood in the way of necessary “tweaks”—evil insurance company executives, greedy doctors, and more. Meanwhile, Obamacare has provided many people with coverage. That’s worthy of support, so how can the new Republican administration and Congress blithely pronounce their commitment to repeal it and walk away from the needs of millions of Americans who now may be significantly or at least slightly less needy?
Some of the blame for this conundrum is well founded, but we have seen the unfolding and unraveling of Obamacare coming since at least 2010, when Republicans regained control of the House with a pledge to stop Obamacare, not “tweak” it. Given Congressional gridlock on ACA “adjustments”—a choice voters made in 2010, 2012, 2014, and made even more forcefully in 2016—there was little chance of avoiding the ACA’s “day of reckoning.” But could someone have emerged as a singular hero, a catalyst to create a semi-rational outcome in the face of huge partisan and popular divides on this issue?
The answer requires a review of the premises of the ACA and the forces that it was supposed to rely on to achieve its key objectives: broader access to affordable coverage through the individual market, expanded group coverage prompted by the employer mandate, increased participation in insurance markets by the young and healthy, and insurance carriers competing to charge reasonable premiums in the face of a highly unpredictable market—the guaranteed issue community rated individual market—that never really existed before.
Most of the tactical elements contained in the ACA were fairly apparent and widely covered, but many were entirely unappreciated. As carriers became the market intermediaries, the risks they faced by operating in that new market had to be reduced by signing up young and healthy enrollees willing to pay inflated prices—ergo, the individual mandate plus federal subsidies.
Another, perhaps more important element, was the “3Rs” programs—risk adjustment, reinsurance, and risk corridors—designed to reimburse carriers for high-risk members they would not have insured otherwise and to “even out” results for carriers attracting more than their pro rata share of high-risk enrollees. Critically, the 3Rs were written to expire this year, on the eve of the 2016 election, creating virtual certainty that the American people would vote with a ticking health care insurance time bomb lurking in the background. As the ticking started, the Obama administration sought to quietly dampen the fuse through back door extensions of the 3Rs’ carrier subsidies, but were thwarted by the work of Senator Marco Rubio (R-Fla.) and by House Republican litigation that has succeeded to date in closing Administration “back doors’ to maintain parts of the 3Rs.
Perhaps, the architects of the ACA were naive enough to believe that 30-50 million young people would flock to the exchanges and purchase overpriced coverage, leaving the carriers to hold prices without the 3Rs’ backstop. But the probability of that became zero after the 2014 enrollment numbers and the agency’s political decision to exempt so many people from the individual mandate. Irrespective of that miscalculation, the inevitable occurred. More carriers joined the exchange market in 2015 and 2016, while the 3Rs game could still be played, reducing sticker shock during the 2015 and 2016 open enrollment periods. But enrollment numbers simply did not move enough and carriers fled from a 2017 open enrollment disaster with no 3Rs protection.
Even with the realities of both the ACA timetable and D.C. gridlock, there was a seminal moment where a singular hero could have emerged—the 2015 Supreme Court challenge to Obamacare, King v. Burwell. In that case, the opportunity presented to the Court, and directly to swing voters Justices Roberts and Kennedy, was simply to read the ACA as written and let the chips fall where they may.
King challenged the Obamacare-implementing agencies’ decisions to disregard the plain language in the statute, which stated that ACA subsidies would be available for coverage purchased on “exchanges established by the states.” It was largely uncontested that Congress anticipated the bulk of the states would create their own exchanges and that if a federal exchange was ever necessary—the now-infamous Healthcare.gov—it would serve as a backup to the state exchanges.
While the administration and nearly 100 non-parties argued themselves into pretzels about the meaning of words and the legislative history, the briefing descended into a parade of horribles about the motivations of the plaintiffs and the consequences of ruling in the plaintiffs’ favor—like citizens losing their subsidies, destabilizing the entire ACA market, and driving pricing up by enormous amounts.
Justice Roberts ruled in favor of the government. His opinion was very short on the interpretation of the words, but very long on the consequences and whether Congress intended them. Even more astoundingly, he conceded that the King plaintiffs had the better argument, but cited various studies saying the ACA could not possibly work if it were interpreted in conformance with its language on subsidy availability, concluding that application of the plain language would have rendered the ACA an inevitable failure. Given his view that the Court should not be a party to the frustration of Congress’ apparent goals, the words of the ACA had to yield.
In doing so, Justice Roberts committed the cardinal judicial sin, which was pointed out by Justice Scalia: giving priority to Congress’ presumed intent rather than the statute’s actual words. In practice, this meant Roberts took it upon himself to “fix” a badly written law. Even worse, he attempted to divine the practical consequences of a ruling in favor of the plaintiffs from a very limited set of inputs and short term outcomes, whether it mattered or not. Like all judges in his position, he had neither the information nor the expertise to make that judgment.
Without question, a decision for the King plaintiffs would have shortened the fuse of the ticking ACA time bomb. Whether the ACA was headed for an explosion because of the 3Rs expiration or not, by June 2015 there was no room for debate. The enrollment trends and successful opposition to 3R extension precluded any other possibility. Whether he realized it or not, Justice Roberts simply bought the ACA eighteen months to fail, not the opportunity to survive.
So what would have happened had the plaintiffs prevailed in King? Many Republicans were prepared to extend the subsidies in all states until the end of 2016, after the Presidential election. Others were working hard on developing alternatives to the ACA. These included continuing financial support for insurance costs for middle-income taxpayers and market reforms to promote competition. Others argued for de-federalizing health care entirely and to give states flexibility to make their own reform decisions. Had they had the opportunity, many on the left would have argued for urgent action on single payer options, Medicare and Medicaid expansion, and other solutions. And this Presidential cycle would have included a robust discussion of the post-Obamacare world, since King would have ended the ACA in several states.
In the end, the King decision deprived the American people of the opportunity to make real choices in a timely fashion. The ACA debate has not advanced an inch since June 2015 and positions have simply hardened on both sides. The election has changed the debate to some degree, but perhaps not in the way the American people would have decided, if provided with a robust debate about alternatives. In the meantime, the ACA premium time bomb has exploded, not only in the laps of consumers, but quite possibly in the hands of well-intentioned advocates of ACA reform, who now face a Republican-controlled Washington.
Regardless of Justice Roberts’ thinking, he did nothing to preserve the ACA or defer to other branches of government. Instead, he gave them a free pass to do nothing for two years and revisit the issue in 2017. In the process, he weakened the Supreme Court as an institution and squelched an opportunity for the American people to start a debate about real health care solutions away from the shadow of the election.
History will likely judge that decision harshly, not only from the perspective of Supreme Court jurisprudence, but also in the even broader sense. When Supreme Court “statesmanship” involves kicking the can down the road, it can only delay conflict, not prevent it. After all, the Dred Scott decision was a dodge by the Court that later tore apart the country.
The new administration may or may not get the solution right, but it has a golden opportunity to find a path that reflects the desires of the American people. But it was deprived of the immense value of a robust debate that should have started in the middle of 2015 and continued throughout the primary and general election process.
The Supreme Court should have passed on the argument that temporary consequences should guide the Justices’ decisions, as they were in no way equipped to assess those consequences because of their limited role and expertise. In that sense, King is a seminal moment in the history of American jurisprudence, but a mere footnote in the health care reform debate, when it could made an enormous contribution to the timing and quality of that debate.