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King v Burwell and the Shakedown

The case of King v Burwell will be decided later this month. Either decision, for or against a federally facilitated subsidy, will affect the long term landscape of Affordable Care Act.

So far, the PPACA has been a success. If someone wants to argue the success of the law, they are going to be facing an uphill battle. Rates across the country, on average for 2015, were at a historical low. Average premium increases were below 5% on averageacross the country.

But let’s get back to politics and whether the subsidy should be issued at the federal or state level. The issue right now is that the Affordable Care Act says that subsidies for health insurance flow through exchanges that are “established by the state”. The plaintiffs are arguing that the federal subsidies should not be allowed in the 38 states that decided to not set up their own exchange.

To me, this is a political scheme to twist the wording and one of 50+ attempts to challenge the legitimacy of the Affordable Care Act. The advanced premium tax credits were always supposed to come from the federal government.

Before we go any further let’s look at some quotes from those that were involved in the rollout of the Affordable Care Act.

-“I don’t ever recall any distinction between federal and state exchanges in terms of the availability of subsidies,” said Olympia J. Snowe, a Republican Senator from Maine who helped write the bill with the finance committee.

-“It was never part of our conversations at any point”, said Ms. Snowe, who voted against the final version of the Senate bill. “Why would we have wanted to deny people subsidies? It was not their fault if their state did not set up an exchange.” The four words, she said were perhaps “inadvertent language,” adding, “I don’t know how else to explain it.”

-“As far as I know, it escaped everyone’s attention, or it would have been deleted, because it clearly contradicted the main purpose of legislation,” said Mr. Bingaman who drafted health workforce provisions that ended up in the ACA. He added, “in all the discussion in the committees and on the floor, I didn’t ever hear anybody suggest that this kind of distinction between federal and state exchanges was in the bill.”

The increase of 5% across the country is largely dependent on the advanced tax credits or subsidies that are available via the federal and state exchanges. Proponents of the law know that if the subsidies were to go away in three quarters of the country, the 8,656,210 people enrolled in plans that are receiving advanced premium tax credits, would be hit with astronomical increases and the bill would appear to be a failure.

The subsidies allow more people to afford the cost of marketplace health insurance which is what we want in this country. If we lose the subsidies a large percentage of people enrolled will not be able to afford coverage and the only place you will have to buy coverage is through your employer. Do we want to deny people the basic right of healthcare and leave them completely dependent on their employer to purchase it? I think not.

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