How the Courts Could Still Doom Obamacare

The news about the health-care law is all positive these days—but a few bad breaks in conservative courts could change all that.
Nate Chute/Reuters

The news these days about the Affordable Care Act—aka Obamacare—has been very positive.

On most fronts, it is working quite well. The ranks of uninsured Americans have declined dramatically. People receiving insurance under the act—with numbers that at least match the rosy expectations and projections raised when it was enacted—are quite satisfied. The Commonwealth Fund's extensive survey found 78 percent of those newly insured are satisfied, including 74 percent of Republicans. A majority said their plans included the doctors they wanted; only 5 percent said they had none of their former doctors in their plans.

At the same time, more insurance companies have indicated they will participate in exchanges in 2015, offering affordable plans; that suggests they will do just fine in this marketplace. This is in contrast to the confident and dire predictions of opponents of both huge hikes in premiums in the second year and a drop in insurers that would devastate the market element of the exchanges.

Following Obamacare's disastrous first weeks of rollout, attacks on the law became the central focus of electioneering ads run by Americans for Prosperity and other conservative groups last year and earlier this year. Many of these ads showcased "victims" of the law who turned out, under media scrutiny, to be anything but victims, or people who had not understood their options or the net cost of plans under the exchanges. Republican candidates who planned to run on a "repeal Obamacare" platform, or even a "repeal and replace" plank, have in most cases tried to shift the focus. This is in part because many, like Michigan's Terri Lynn Land, have had no good answer to the question of whether they support the expansion of Medicaid in their states, and they have had no answer about what they would do to replace the ACA.

Plenty of glitches and bumps in the road remain, including the controversy over whether and when to roll out the employer mandate and the fate of the uninsured (not to mention community hospitals and other providers) in states that have refused to extend Medicaid coverage. But proponents of reform have many reasons to be relieved and even satisfied now. When the Medicare prescription-drug law was enacted, it faced a comparably rocky rollout, forcing President George W. Bush to go way beyond the letter of the law to postpone some portions and to require providers to step in where the law did not require it. It was as unpopular as Obamacare when it started—but eight years later, it is widely popular and entrenched. Five years from now, the same might well be true of the Affordable Care Act.

But, of course, the ACA is different in key respects from Medicare Part D. While partisan in its enactment, Part D was bipartisan in its implementation. As Hillary Clinton said when its implementation was at its rocky low, "I voted against it, but once it passed, I certainly determined that I would try to do everything I could to make sure that New Yorkers understood it, could access it, and make the best of it." Democrats in Congress didn't vote once, much less 50 times, to repeal it or gut it, and neither they nor their liberal acolytes filed lawsuits to overturn or upend it.

It is the latter set of moves that should make both proponents of the law and those now insured under it wary right now. Two suits—NFIB v. Sibelius, and Burwell v. Hobby Lobby—resulted in flesh wounds to the law, the first making the expansion of Medicaid voluntary for the states, the second creating exceptions for closely held for-profit corporations when the owners have religious objections. But there is another set of cases that could do much more damage.

I am not talking so much about the now-famous and hyped lawsuit that Speaker John Boehner is launching against the president for failing to faithfully implement the employer mandate element of the ACA. I doubt it has any serious chance of reaching the Supreme Court. Imagine giving standing to a group of lawmakers who say they want the law implemented but who voted against the law, voted dozens of times to repeal it, and themselves called for delay in its implementation!

Rather, the threat comes from an as-yet-little-noticed and more obscure set of four lawsuits filed by ideologically conservative activists and their lawyers, two of which have reached federal Appellate Courts, the D.C. Circuit and the Fourth Circuit both of which could rule any time now on their cases, Halbig v. Burwell and King v. Burwell.

The key to this litigation is an awkward wording in the statute about the subsidies available to the less affluent, which says the subsidies come "through an Exchange established by the State under Section 1311." If we relied only on a literal reading of these words in isolation, there would be no subsidies allowed by exchanges not established by individual states—meaning that millions of people who are insured in the federal exchanges in the 36 states that refused to establish their own state-run marketplaces would be stripped of eligibility for subsidies. This would be devastating for most of them; the insurance they are receiving is affordable because of the financial assistance. But the damage would go beyond these individuals. As they dropped their insurance because of its unaffordability—except for the really sick or endangered among them, who would still benefit by keeping their plans even at a higher cost—it would radically alter all individual insurance markets, changing the risk pool in ways that would destabilize them.

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Norm Ornstein is a correspondent for The Atlantic, a contributing editor and columnist for National Journal, and a resident scholar at the American Enterprise Institute for Public Policy Research.  More

Ornstein served as codirector of the AEI-Brookings Election Reform Project and participates in AEI's Election Watch series. He also serves as a senior counselor to the Continuity of Government Commission. Ornstein led a working group of scholars and practitioners that helped shape the law, known as McCain-Feingold, that reformed the campaign financing system. He was elected as a fellow of the American Academy of Arts and Sciences in 2004. His many books include The Permanent Campaign and Its Future; The Broken Branch: How Congress Is Failing America and How to Get It Back on Track, with Thomas E. Mann; and, most recently the New York Times bestseller, It's Even Worse Than It Looks: How the American Constitutional System Collided With the New Politics of Extremism, also with Tom Mann.

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