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‘SCOTUScare’ Will Be On The 2016 Ballot

protestors with signs, one reading ACA Is Here To Stay
photo by Ted Eytan

Justice Antonin Scalia did not get his way in the King v. Burwell ruling, but he did manage to coin a new nickname for the beleaguered Affordable Care Act.

Obamacare, meet SCOTUScare.

The health care law managed to survive another day at the Supreme Court, largely because six justices were persuaded to do what they usually refuse to do: repair a law that, as Congress wrote it, is patently defective. In this instance, that meant ruling that subsidies for insurance purchased on exchanges remain legal, regardless of whether an exchange is state-run or federally run.

Chief Justice John Roberts, in the majority opinion, wrote, “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.” In other words, the subsidies are so integral to the working of the law that it is implausible to think Congress meant to restrict access to them in some states, even if that’s the result of the law as written.

The Court majority itself acknowledged it was entering murky legal territory. Roberts quoted Marbury v. Madison in making plain that the Court cannot make new law, though he also noted “That is easier in some cases than in others.” In this case, the justices who voted to keep the subsidies opted to read the legislation in light of what it believed to be Congress’ intent when faced with the tangle of what Congress actually wrote.

While the majority argued that Congress intended to improve rather than destroy insurance markets, their ruling in King v. Burwell will not secure that end - and it almost certainly could not have done so, no matter what the ruling was. The impact of the Court’s decision will merely be to allow the Affordable Care Act to destroy the markets more slowly than would have been the case had the justices removed the challenged subsidies outright.

We are already seeing the signs of markets beginning to crumble, and this ruling won’t change that. Health insurance premiums are rising sharply, and they will inevitably continue in that direction under our current framework. As I have written in this space, any law that allows people to wait until they are sick before buying health insurance will inevitably lead to premiums that have nowhere to go but up if insurers want to keep the lights on.

Speaking of those people waiting to buy insurance, there are still a lot of them out there, even with the subsidies in place. The Congressional Budget Office estimates that about 35 million nonelderly adults remain uninsured, and while that number is predicted to drop over the coming decade, even optimistic projections allow for a significant chunk of the population to remain outside the health insurance system. The largest group among uninsured right now are Americans who have access to insurance through an employer or the exchanges, but choose to forego it. Generally healthy Americans are often doing the math and remaining uninsured despite the law’s incentives and penalties, because as long as they stay reasonably healthy, going without is still the more rational economic choice.

Mike Perry, a pollster for the Robert Wood Johnson Foundation and the GMMB communications firm, told The Wall Street Journal that people who forego insurance generally are not acting out of ignorance. “They’ve been to [HealthCare.gov],” he said, “they’ve done the math.” The conditions Obamacare created mean that even when considering this year’s increased penalties, which start at $695 for an individual, many people simply can’t justify buying insurance at the prices they are asked to pay while they are still basically in good health. And some experts worry that people who have insurance now may drop out in the future as premiums rise and they re-evaluate their personal ability to pay.

Another sign of the way insurance markets are falling apart is the financial shakiness, and in one case outright failure, of the newly implemented insurance cooperatives. Consumer Operated and Oriented Plans, which are chartered and regulated at the state level, were touted as a way to inject government-run competition into the private health insurance marketplace. The theory was that co-ops would provide better benefits and lower prices. The practice has been that, after 2014, most of them have found their premiums significantly underpriced and ended up deep in the red.

Iowa’s CoOportunity Health was the first co-op to collapse outright. An Iowa state court ordered the organization’s liquidation in February, leaving at least 120,000 members scrambling to find alternate coverage, according to The Des Moines Register. Standard & Poor’s reported that 10 other co-ops had loss ratios worse than that of Iowa’s program in the third quarter of last year, meaning that it’s probably a question of when, not if, the next one fails.

To no one’s surprise, many Republicans were outspoken about their disapproval in the immediate aftermath of the King v. Burwell ruling. Mike Huckabee, the former Arkansas governor and current presidential hopeful, characterized the decision as “an out-of-control act of judicial tyranny” on Twitter. Others saved their ire mainly for the law itself. Former Texas Gov. Rick Perry said, “While I disagree with the ruling, it was never up to the Supreme Court to save us from Obamacare.”

Yet while many Republicans and conservatives are disappointed in the decision, it may very well prove a political blessing to them. Now the Republicans who control Congress today are not on the hook for trying to clear away the wreckage that would have been left if the Court had stripped the subsidies instantly from consumers who purchased insurance on the exchanges in most states. Instead, they can concentrate on distinguishing themselves from their Democratic opponents as the law slowly and inevitably pushes the insurance markets toward self-destruction. Democrats built the Affordable Care Act, and now that the Supreme Court has again upheld it, Democrats own the law and its consequences. The Republican National Committee was quick to issue a statement making exactly this point.

Voters in next year’s presidential election will have a very clear choice. Do they want a Democrat who is committed to the law’s grievously flawed basic structure, or a Republican who is willing to work with a GOP-controlled Congress to repair and reform it beyond recognition?

Either way, the labels “Obamacare” - and now “SCOTUScare” - are going to be remembered as shorthand for a statute so broken that the Supreme Court had to pick a result and then work backwards to find a legal rationale to reach it.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us” and Chapter 4, “The Family Business."

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