Thoughts on a post-King market

I alternate between being sure that there are five votes on the Supreme Court to throw out a couple of generations of agreed upon administrative law precedents in order to keep people from getting subsidized health insurance in most states, and being reasonably confident that there are only three votes to gut the ACA.

In either scenario, I see the four liberal judges writing a fairly brief and caustic opninion that can be summarized as “Why the fuck are we wasting our time on a minor drafting error case that is advanced by sociopaths, liars and con-men. The law is simple, coherent and not batshit insane when read in its entirity, so of course the subsidies are legal in Healthcare.gov states.” The other two judges in the positive scenario will write a paen to the majesty of cooperative federalism where the law clearly states that subsidies only go to state run exchanges BUT the threat was not clearly communicated therefore, the subsidies have to flow to all states. Nicholas Bagley has been advancing this argument that the ACA was a cooperative federalism model and the states must be respected.

But what happens if the Supremes have five sadists instead of three?

Assuming the ruling comes out in June, policies from Healthcare.gov would be run through July 1st.  The Center for Medicare and Medicaid Services (CMS) signed contracts with insurers offering products on Healthcare.gov that they could pull products if Halbig/King were successful.  Quite a few insurers would pull most if not all of their On-Exchange products effective July 1 or August 1 depending on state level notification requirements.  After that, the remaining individual insurance market now looks like the pre-PPACA New York State insurance market where there is guarantee issue and no medical underwriting but no subsidies and no mandates to get healthy people into the risk pool.  We get a death spiral where average premiums for a 30 year old would almost double in two years, and most reasonably healthy people who otherwise would have qualified for subsidies now sit out of the market because they can’t afford the coverage.

 






57 replies
  1. 1
    dmsilev says:

    I find it interesting, in a perverse way, that some conservatives are now taking the approach of saying that all the liberal “warning of consequences” is just fear-mongering and nothing bad will happen if the 5-sociopath-scenario comes to pass (c.f., via LG&M, this article in the American Spectator).

  2. 2
    gussie says:

    What does ‘guarantee issue’ mean?

  3. 3
    JPL says:

    Roberts will say it is simple fix for Congress to make. There goes health care for millions of people.

  4. 4
    jl says:

    But that death spiral would only be in the states with exchanges set up by the federal government, right? What would happen in states that set up their own exchanges? Do you think the whole system would fail, or the country would be split in half with the state exchange half continuing with ACA, and the others with no individual market?

  5. 5
    Richard Mayhew says:

    @jl: California, New York, DC. etc would be fine until the political coalition to support the ACA collapses.

  6. 6
    Richard Mayhew says:

    @gussie:Guarantee issue is the insurance company must issue a policy to anyone who fill out the application. Community rating is how policy pricing is determined. A single rate for a given geography/age/smoking status is offered for each plan in a community rating system while in an underwriting/individual rating system, a pair of twins living on the same block could get very different rates if the elder twin has a different medical history than the younger sibling.

  7. 7
    jl says:

    @JPL: That would promote Roberts’ weasel cred among his fellow reactionaries. I think impeachment and removal would be justified for any justice who votes against subsidies.

    I don’t want to trigger a cascade of comments explaining why that cannot happen, so I acknowledge that will not happen in our world. But in a more just and rational world, it would happen.

    @Richard Mayhew: thanks. Political question is whether that scenario would harm popular and political backing for ACA, or whether it would produce political pressure from shafted people in shafted states on Congress to fix it up. Which this Congress won’t do (at least openly, the ‘grown-ups’ McC and Johnny Bones may push through a weasel work around patch that would be designed to fall apart at a convenient time for them), but would produce an overly interesting 2016, I think.

  8. 8
    jl says:

    @Richard Mayhew: Thanks for clear explanation. I think NY and NJ and another state (I forget which) tried community rating and guaranteed issue in early 1990s, which sent rates in individual market skyrocketing and reduced coverage in that market, aka induced an insurance death spiral.

  9. 9

    I think a result maintaining existing policies, but also strengthening “states rights” is a possible one. This Court is notorious for decisions in which the loser is the law.

  10. 10

    @dmsilev:
    I’ve seen that one before. First, they say that the warnings of dire things to come are just fear mongering. Then, when the bad things come to pass exactly as predicted, they’ll claim that they’re a result of the people who gave the warnings punishing us for not going along. It’s predictable total bullshit.

  11. 11
    jl says:

    @The Raven on the Hill: I interpret your comment to mean that Roberts will repeat the legal gymnastics he performed for the first big ACA decision that denied Medicaid expansion provision but preserved as much of the law as possible, while preparing the way for further commerce clause mischief when needed later in his career.

    If I understand your comment, then Roberts playing the long game may benefit sane policy in the short run

    @Roger Moore: The reactionaries have already spoken out of both sides their mouths on this: nothing will happen and, hey, maybe preventable premature pain and death are optimal after all for the lesser people. So, they’ve already greased the rails for the BS blizzard, if they win.

  12. 12
    Mary G says:

    I was positive the Supremes were going to rule against Hobby Lobby (stupidest store name evah) and was shocked when they didn’t. So you never know with these concern trolls posing as judges.

  13. 13
    Sasha says:

    The one thing that (almost) convinces me that Roberts will vote with the liberals is that no business entity is for King at all, and Roberts is a reliable pro-business justice.

  14. 14
    rikyrah says:

    thanks for this.

    it’s ridiculous to think that they even took this pathetic case.

    OT: you gonna talk about what the new Governor in Pennsylvania wants to do about Medicaid.

  15. 15
    catclub says:

    the states must be respected.

    Equal dignitude of the states argument was used (by Roberts!) to kill VRA enforcement pre-clearance provisions.

  16. 16
    MomSense says:

    Did anyone see the Mother Jones article about the Plaintiffs in this case?

    Here’s a link. http://www.motherjones.com/pol.....-obamacare

    When I asked her if she realized that her lawsuit could potentially wipe out health coverage for millions, she looked befuddled. “I don’t want things to be more difficult for people,” she said. “I don’t like the idea of throwing people off their health insurance.”

    Levy was under the impression that if the case prevailed, someone would surely fix the insurance situation, probably at the local level. “I think [Virginia’s Democratic Gov.] Terry McAuliffe wants to expand Medicaid,” she remarked. She didn’t know that the Medicaid expansion was part of Obamacare, or that the same forces backing her lawsuit have opposed this expansion in her state. She was also unaware that there is no Plan B in the works to rescue the people who could lose their insurance if her case is successful.

    sigh.

  17. 17
    Hungry Joe says:

    If the Five Horsemen of the Supremes gut the ACA, kicking off that death spiral — millions of people thrown out of decent coverage, premiums skyrocketing, etc. — it’ll be Obama’s fault, of course. Just wait.

  18. 18
    Iowa Old Lady says:

    @Mary G: Me too. Once they decided the Hobby Lobby store had religious beliefs, I figured anything could happen.

    Now that I look back, I should have known when they stopped the vote counting in Bush v Gore.

  19. 19
    jl says:

    @MomSense: I’ve also read at Lawyers Guns and Money blog (which has been all over this case, and has good links to legal analysis and briefs) that all but one of the plaintiffs probably do not have standing, since they can get coverage from alternative sources and are not harmed at all by the legal issue at hand.

    Not sure if that will make any difference. Wonder if Levy is one of those who may have dodgy standing.

  20. 20
    Face says:

    if the Supremes have five sadists

    “if”? They wouldn’t have snatched this from the circuit court of appeals if they were going to simply affirm what that court was clearly going to say. This is as good as dead.

  21. 21
    jl says:

    @Hungry Joe: I think that depends on how big a public stink Obama decides to make about it. He is in his ‘legacy’ mode, and might do just that. Will he try to make it an issue for 2016?

    If Obama makes a big stink, and Democratic candidates follow-up, corporate media will try to obfuscate with their ‘bothsidesdoit’ and ‘inadequate blah man’ act, but that does not mean they will be successful. Their incompetence is a double edged sword.

  22. 22
    Belafon says:

    @Face: It does only take four to want to see a case.

  23. 23
    Cacti says:

    @Mary G:

    I was positive the Supremes were going to rule against Hobby Lobby (stupidest store name evah) and was shocked when they didn’t. So you never know with these concern trolls posing as judges.

    Roberts is the most reliable vote for big business on the SCOTUS bench, and will generally come down on whatever side is most beneficial to business interests.

    The above is why I’m not entirely sure how he’ll come down in the King case.

    Hobby Lobby was a chance to expand corporate rights in a major way, and didn’t surprise me in the least.

  24. 24
    Samuel Knight says:

    Still not clear on 2 questions:

    1) Would there be a death spiral with states that already have their own exchanges?
    2) Could the Feds offer a simple contract with the other states saying that they are contracting to the Federal government to run their excahnge? Would set off a huge fight.

    The other thing I’d posit here is that biggest reason that the ACA continues to be so unpopular is that for 6 years President Obama has simply never explained it, and most particularly never explained why it is set up the way it is. He was incredibly lucky in the last campaign that Bill Clinton came in and did it for him. And now this crisis could finally back the Democrats into a corner to finally explain what they’ve done.

  25. 25
    balconesfault says:

    Do we get some number of people who stand to benefit from the exchanges moving to blue states?

  26. 26
    jl says:

    @Samuel Knight:

    In case RM does not come back for a while:

    ” 1) Would there be a death spiral with states that already have their own exchanges? ”

    I think he gave a definite ‘no it would not’ in comment 5 above.

  27. 27
    rikyrah says:

    @Face:

    They wouldn’t have snatched this from the circuit court of appeals if they were going to simply affirm what that court was clearly going to say. This is as good as dead.

    You only need 4 to hear a case. We know which 4 voted to pull this case forward before the En banc decision.

  28. 28
    Samuel Knight says:

    And yes, Hobby Lobby and Citizen’s United really do compete with Dred Scott or Plessy as being the most spectacularly ridiculous rulings from the Supremes.

    Yes, corporations have religion!
    Money is speech!
    Separate is equal!

    Or from the 90s, yes, a President wouldn’t be distracted from his job by a suit against him (Paula Jones).

  29. 29

    @jl: Just so, but don’t underestimate the long-term depth charges.

    I think a 5-4 decision in favor, with, maybe, three liberal judges concurring on a separate decision, one + Roberts writing, and four against seems a likely outcome.

    Shall we set up a betting pool?

  30. 30
    Bobby Thomson says:

    @Face: unfortunately, this.

  31. 31
    Samuel Knight says:

    jl – thanks I wasn’t sure that #5 was saying it the exchages would be fine in all the state-exchange states.

    One other note – will make it a lot easier for a democratic candidate to say that the Supreme Court is important.

  32. 32
    Quaker in a Basement says:

    @Richard Mayhew: And the collapse would come quickly. As healthy people flee the market and sick people are forced out of it, there will be a widespread rebellion against the individual mandate and the corporate mandate isn’t yet in effect.

  33. 33
    Patrick says:

    @JPL:

    Roberts will say it is simple fix for Congress to make. There goes health care for millions of people.

    If the USSC goes forward and make it illegal for subsidies in certain states based on a drafting error, won’t this cause chaos going forward? Literally every bill that Congress passes has some kind of drafting error that, just like the ACA, should be irrelevant. But with this new precedent, won’t every plaintiff from now on have a strong basis for having just about every bill that Congress passes ruled invalid? All they have to do is find some kind of drafting error.

  34. 34
    Patrick says:

    Maybe there is some hope…

    This group might have a tough time getting together a golf foursome—much less one for crippling Obamacare.

    New reports are raising questions about whether three people pursuing a Supreme Court case challenging Obamacare subsidies in much of the country actually have the legal right to bring that case.

    http://www.cnbc.com/id/102413868

  35. 35
    jl says:

    @Samuel Knight: There could be spill over effects, since the overall size of the pool for funding the risk adjustment mechanisms will be smaller. But I think if two of the huge population states like CA and NY, and most of New England, along with big enough states like WA, OR, MN and CO are in, then risk adjustment funding will be OK.

    I’d be interested in hearing more about exactly how it would work from RM, though.

  36. 36
    jl says:

    Handy-dandy interactive map of which states will be affected, and how, from Commonwealth Fund:

    Health Insurance Marketplaces by Type
    Hover Over Federally Run Marketplace States for Estimates of Potential Implications of King vs. Burwell Decision

    http://www.commonwealthfund.or.....change-map

  37. 37
    Samuel Knight says:

    The whole standing story makes this case even more delicate for the Supremes.

    Makes it just too clear that the case is a joke. Going along with already plunging trust in the institution (well-deserved)

    And the true cynic would say if the Wall Street Journal is printing stories undermining the case, the establishment is saying very loud and clear – don’t take our bogeyman story seriously – that’s for the yahoos. We have a good thing going Supremes – we’re getting everything else we wnat -don’t completely blow your cover.

  38. 38
    richard mayhew says:

    @Face: Only 4 are needed to grant Cert

  39. 39
    richard mayhew says:

    @The Raven on the Hill: I’m split between 5-4 against or 6-3 for (with 3 seperate reasons) but I can’t see a 5-4 decision for the government as being likely. This is all gut feel analysis and nothing more than that. So I’ll get into the pool and short the 5-4 for the government square.

  40. 40
    Face says:

    @Patrick: I’m sure they’ll attach some “this decision is unique to this case only and cannot be applied to anything else ever, no backsies bitchez, suck it” rider to the preamble of their oral shit-show.

  41. 41
    Patrick says:

    @Face:

    Perhaps. The thing is the more often they do such things (such as Bush v Gore), the less and less credible the court becomes.

  42. 42
    Robert M. says:

    I can’t see a 5-4 decision against the plaintiffs (that is, in favor of the ACA). There are four reliable votes against the plaintiffs and three in favor, which leaves Kennedy and Roberts. I think they’ll end up voting together, meaning the case will end up 5-4 in the plaintiffs’ favor or 6-3 against, and here’s why.

    Roberts has shown some tendencies toward being a bellwether; he’s clearly concerned about his legacy as Chief Justice. If it looks like the subsidies to Exchange states will continue, he’s not going to want to go down in history as one of the people who tried to kill it and failed.

    (That is, he’s probably okay with trying to kill it and succeeding, but he’d need some kind of intellectual justification that overcomes his interest in being perceived as thoughtful and even-handed.)

    Meanwhile, Kennedy is the bleeding heart on the conservative side of the bench. Screwing people over directly (as a decision for the plaintiffs in King v Burwell would) doesn’t get him off the way it does Scalia and Alito. He’s not always the clearest thinker, for my perspective, but he’s not a drown-it-in-the-bathtub movement conservative. Any argument that works on Kennedy is going to have to engage an interest in actual liberty, and that kind of argument would give Roberts the cover he needs. That leads to a 5-4 decision with Roberts or Kennedy writing the majority opinion.

    But in the absence of a Kennedy-friendly argument, I think he’ll be writing the majority opinion with Roberts and Breyer joining. Ginsburg will write a sarcastic concurrence with Sotomayor and Kagan. That makes it 6-3 against the plaintiffs, with just Thomas, Alito, and Scalia voting to uphold the circuit panel’s decision.

    (There’s also an slim chance, I think, that the votes for review were Alito, Scalia, Roberts and Kennedy–but not Thomas. He has a strong history of a sort of small-government federalism, which might lead him to oppose the ACA in principle–but that doesn’t mean he’s going to be okay with a ruling that would effectively remove options from states.)

  43. 43
    jl says:

    Nagging RM for more on effects on remaining states: effects on risk pool for remaining states also depends on decisions of big providers in remaining states. I am worried about long run consequences on risk adjustment mechanism and how that might interact with big insurer decisions regarding participation in remaining states.

    On other hand, we only need to get to 2016 for a big decision. So maybe I am worrying about nothning.

    RM has his bets down in the pool now, so maybe he can say a few words.

  44. 44
    jl says:

    @Face:

    “this decision is unique to this case only and cannot be applied to anything else ever, no backsies bitchez, suck it”

    Some clearly see themselves as Immortals!

  45. 45
    catclub says:

    @Samuel Knight:

    The whole standing story makes this case even more delicate for the Supremes.

    Well, this way they can reject it based on lack of standing, then leave it hanging for a year or so,
    because, reasons. Actually, rejecting it based on lack of standing is extremely face saving, in the face of all the amici briefs that have said the case should never have been taken in the first place. It is a two line rejection.

  46. 46
    cmorenc says:

    @JPL:

    Roberts will say it is simple fix for Congress to make. There goes health care for millions of people.

    If Roberts joins the other right-wing sociopaths on the court to hold the ACA language doesn’t authorize federal exchanges, you can guarantee the “simple to fix” rationale will be part of the opinion, right after all the sophistry about the effect of the statutory language as written. However, if he was going to vote to gut the ACA, he already had a far better chance to do so back when the underlying constitutionality of the ACA was decided, and he passed. The potential saving grace in Roberts is that although he is definitely undertaking to reshape American Constitutional law along conservative lines, IMHO at least he wants to do so in a manner that best preserves his reputation and integrity as a jurist (and that of the Supreme Court as an institution) rather than fueling too much the appearance of being a partisan political player and institution. He cares about his legacy both ways, and perhaps realizes that his efforts to reshape the law will only create a truly lasting legacy if they are respected as more than partisan political maneuvers under transparent cover of judicial robes.

    LET’S HOPE that’s true – because if it isn’t, the ACA is toast. And so is SCOTUS as an institution beyond merely the partisan arm of whichever party appointed the greater proportion of justices at any given time.

  47. 47
    Iowa Old Lady says:

    I’m constantly struck by how much we live in a “let’s pretend” world. This is plainly a stupid suit, and people feel compelled to treat it seriously. It’s like the Emperor’s New Clothes.

  48. 48
    mak says:

    @Face: Only takes four to take up a case, thankfully

  49. 49
    wvng says:

    Richard, any thought what would happen with states like WV that actively partnered with the feds in implementing the exchange in WV, but elected to use the federal exchange?

  50. 50
    jharp says:

    Why no mandates?

  51. 51
    TriassicSands says:

    I don’t know what to expect from the radical five, since they have provided the majority for some pretty crazy and disgusting stuff in recent years. Thomas is by far the craziest of all, so finding him on the right side (i.e., correct side) of any vote is shocking. Scalia isn’t as crazy, but he’s one nasty piece of work and with his towering ego and larger than life hypocrisy he’s a good bet hurt as many people as he possibly can. Alito is another radical nut. The question is will Kennedy and Roberts hop in the clown car with the other three. It could go either way, but I’m genuinely worried.

  52. 52
    Richard mayhew says:

    @jharp: mandate disappears if the insurance post subsidy is unaffordable

  53. 53

    @mak: “Always four there are.”

  54. 54

    […] in the ACA (or at least the part about exchanges) being overturned? Insurance exec Richard Mayhew says it won’t be pretty, with most subsidized exchange policies being yanked this summer. But wait! There’s […]

  55. 55
    Rich S. says:

    @JPL: I am very sorry to say that I truly am beginning to fucking hate republicans. They are sociopaths.

  56. 56
    Rich S. says:

    @Face: Yes. “If” indeed. Who remembers Scalia’s response in a previous case where Verilli mentioned that there are laws that obligate hospitals to treat those who come into the ER with serious illness or injury, and that must be paid for. Scalia said, “Then don’t obligate yourself to it.” Yes, he is at least one sadist.

  57. 57

    I don’t care what happens. The ACA is terrible as it stands – this might force a major reform (after a few years of misery for more people) Last year I signed up for a bronze plan for my teenage son and myself. My spouse is covered under her employer but to add us to her policy would cost over $350 each!! The Arizona (federal exchange) plan had a $5K deductible and a 70/30 co-pay over that “self-insured reserve” for an affordable $100 per month cost (effectively excess insurance). We never made a claim during the past 12 months (lucky) and paid the few physician visits directly. This year we were “automatically” renewed but the new monthly premium is $180 and the co-pay is down to 60/40. I’m just not going to pay for this crappy excess insurance. We’ll take the risk or fly to Europe to get treatment (due to fluency in another language and a last name that fits in over there but they treat people not insured entities over there). The entire US system is run by sociopaths and psychopaths (not just healthcare) who prefer the 99% who do not work directly for them to die as soon as possible. Obama is a nasty, mendacious puppet of the criminal oligarchy. To hell with both political parties. I’ll never vote again as it just doesn’t matter. By the way, the new AZ governor was elected with Koch Bros money. Now everyone is surprised he is cutting taxes for the 1% and gutting funding for public education. Most American voters are too stupid to deserve anything better.

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