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  • Andy Adams

How BIG is Halbig? Answer: Too early to tell

The legal challenges to the ACA just keep on coming. We discussed the mixed bag that was the Hobby Lobby decision last month. For July, it is Halbig v. Burwell. Here is the skinny:

In a 2-1 opinion, the Court held that the Internal Revenue Service regulation authorizing tax credits in federal exchanges was invalid. Judge Griffith, writing for the court, concluded, “the ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges ‘established by the State.” In other words, the court reaffirmed the principle that the law is what Congress enacts — the text of the statute itself — and not the unexpressed intentions or hopes of legislators or a bill’s proponents.

So, is this the demise of the ACA? For the (what is it? 10th?) time, no. Not yet. Supporters of the ACA are railing against the decision. How dare they enforce the language of the statute! To understand why they are so upset, you need to know the significance of the ruling.

Obviously, it would have the effect of taking away a subsidy from anyone receiving one through the federal exchange. There are 5.4 million enrollees through the federal exchange and 2.8 million through the state exchanges. It stands to reason that the majority of enrollees receiving subsidies are also in the federal exchange. This is because 36 states chose not to adopt an exchange. But, the implications go beyond subsidy eligibility. Obtaining a subsidy is the necessary trigger event that applies the penalty to any employer not complying with the employer mandate. Without a trigger, no penalty will apply. Thus, we could potentially have 36 states without the threat of an employer penalty. Huge implications.

Will it be upheld? It most likely will be heard at the en banc level and given the more liberal make up of the DC Circuit court, it may be overturned. But, Halbig is not the only case considering this question. There are other cases considering the same question in different circuits. It is not hard to imagine that one of them will come to same decision. At that point, the Supreme Court will once again have the fate of the ACA in its hands. But, if this was just a typo, can't the court simply reform the statute?

Supporters of the ACA have claimed that this was simply a mistake. But then, opponents have found video that reveals the law was written as intended.

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