Archive | Insurance Exchanges

D.C. District Court Judge Friedman (Clinton Appointee) Rejects Challenge to Obamacare Federal Exchange Subsidies

There’s a lot to absorb in Wednesday’s opinion, but I can’t get past this analysis:

Why would Congress have inserted the phrase “established by the State under [42 U.S.C. § 18031]” if it intended to refer to Exchanges created by a state or by HHS? But defendants [the government] provide a plausible and persuasive answer: Because the ACA takes a state-established Exchange as a given and directs the Secretary of HHS to establish such Exchange and bring it into operation if the state does not do so. See 42 U.S.C. §§ 18031(b)–(d), 18041(c). In other words, even where a state does not actually establish an Exchange, the federal government can create “an Exchange established by the State under [42 U.S.C. § 18031]” on behalf of that state.

I’m certainly no expert at this point on the relevant provisions, and maybe if I went back and read all the cited language this would make more sense to me. But for now, the idea that “an exchange established by a state” can in practice be “an exchange established by the Federal Government on behalf of a state” seems to me to do violence to the English language. Of course, after C.J. Roberts’ opinion in NFIB, such concerns may no longer be decisive. Or maybe this is why the Democrats were so intent on getting three new nominees on to the D.C. Circuit?

UPDATE: This, from the comments, seems right to me: “A s1321 Fed Exchange is a s1311 Exchange. But it still isn’t a s1311 exchange established by the state, which is what is necessary to get the tax relief. It’s a s1311 exchange established by the Feds, because the state has failed to … establish an exchange.” [...]

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Open Thread on Personal Experiences With the Affordable Care Act (Obamacare)

Before posting about my experiences trying to get health insurance for a family member for whom I have a power of attorney, I want to ask VC readers about their personal experiences (and those of their family members). I want to hear both positive and negative experiences.

For example, who had no health insurance before but now has it? Who had insurance before but doesn’t have it now? Why?

Who had a big increase or decrease in coverage, deductibles, or premium cost? Are your existing doctors included in your insurance company’s new network?

What experiences have you had on or the state sites? Have you had trouble having your identity verified? Has the chat function worked for you? How payment worked for you? Have you gotten your insurance card?

Are any of you too rich for Medicaid but too poor for subsidies on the exchange? Has the site informed you that you are enrolled in Medicaid when you have never been in Medicaid and have never applied for it (this happened to someone writing online and to my family member)? Have you experienced the website saying that a state Medicaid official would call you, and if so, did a Medicaid official call you? Has anyone appealed a determination, and on what basis?

Please be as specific as possible in telling your personal stories. [...]

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The Oregon Medicaid Experiment and New Possibilities for Quasi-Experiments

Jonathan Adler has already noted the new article in Science using data from Oregon’s Medicaid experiment. It found that expanding Medicaid led to a 41% increase in visits to the emergency room, including increases in visits for conditions that would be better treated in a primary care setting. Here is the abstract:

In 2008, Oregon initiated a limited expansion of a Medicaid program for uninsured, low-income adults, drawing names from a waiting list by lottery. This lottery created a rare opportunity to study the effects of Medicaid coverage using a randomized controlled design. Using the randomization provided by the lottery and emergency-department records from Portland-area hospitals, we study the emergency-department use of about 25,000 lottery participants over approximately 18 months after the lottery. We find that Medicaid coverage significantly increases overall emergency use by 0.41 visits per person, or 40 percent relative to an average of 1.02 visits per person in the control group. We find increases in emergency-department visits across a broad range of types of visits, conditions, and subgroups, including increases in visits for conditions that may be most readily treatable in primary care settings.

Like Adler, Sabrina Tavernise at the New York Times explains one reason this study might be important:

Supporters of President Obama’s health care law had predicted that expanding insurance coverage for the poor would reduce costly emergency room visits as people sought care from primary care doctors. But a rigorous new study conducted in Oregon has flipped that assumption on its head, finding that the newly insured actually went to the emergency room more often.

As some have noted, greater use of the emergency room is not necessarily a bad thing; one would want to look at health outcomes, as well as the modest increase in costs.

I wanted here to [...]

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Another ObamaCare Delay: SHOP Exchange Enrollment

Politico reports:

The Obama administration today announced a one year delay of online enrollment for small businesses looking to purchase health coverage through federal Obamacare exchanges, another high-profile setback for

It’s the second delay for online small business enrollment, which the administration had said would begin this month. . . .

The administration originally delayed online enrollment in the federal-run small business exchanges just days before the failed Oct. 1 launch of At the time, HHS said online enrollment would be available “sometime in November.” But now, it won’t be ready until November of next year.
The latest delay applies only to the federal-run SHOP exchanges in almost three dozen states. With a few exceptions, SHOPs in states running their own exchanges have had a smoother rollout.

Wonkblog has more. [...]

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Another Illegal ObamaCare Fix?

With still not working the way it is supposed to — and large portions of the “back office” functions yet to be completed — the Administration is preparing another fix: Allowing consumers to purchase qualified insurance plans directly from insurers with the benefit of the subsidies that are only supposed to be available through state-based exchanges.  The law’s language is quite clear on this.  Up until now, the Administration had argued that the subsidies can be provided through federal exchanges (and not just those “established by a state” as specified in the PPACA’s text), but now it may argue that exchanges are not required at all.  Further, as Megan McArdle notes, the law quite clearly excludes insurance companies from performing exchange functions.  Once again, the Administration appears to be breaking the law to save it. [...]

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More on the Legality of the Latest ObamaCare Fix

Last Thursday, the President announced a change in Administration policy designed to ensure that those who like their health insurance plans will be able to keep them for at least one more year, despite the legal requirements of the PPACA and its implementing regulations.  On Friday, I explained the President lacks the authority to waive the Act’s requirements, or even to set aside duly promulgated regulations, and could not make noncompliant health insurance plans legal under the PPACA.  All the President can do is to declare that the federal government will not enforce the PPACA’s requirements against insurers for renewing noncompliant plans.  The President’s announcement does not bind state insurance commissioners, however, nor does it overcome the legal jeopardy health insurers could face should they agree to renew such plans and enforce any terms that have been declared illegal under the PPACA.

The University of Michigan’s Nicholas Bagley is certainly more sympathetic to the PPACA than am I, but he is no more convinced of the legality of the President’s purported “fix.”  In a post on The Incidental Economist, he explains why he doubts whether the President’s assertion of enforcement discretion “works.”

The administration’s claim rests on an expansive reading of Heckler v. Chaney, an important Supreme Court decision from 1985. In Heckler, the Court held that agencies have wide discretion to decide whether, when, and how to enforce the law. No agency, the Court explained, has enough resources to police every technical legal violation. Instead, agencies must set priorities based on a host of factors—the harm caused by the violation, the likelihood of prevailing, the need to conserve scarce resources, and the like. Courts shouldn’t second-guess how an agency weighs all those factors. Enforcement, in the legal jargon, is “committed to agency discretion by law.”

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The Legality of the Latest ObamaCare Fix

Yesterday, the President announced a purported fix to the problem that, under the PPACA, insurance companies are not allowed to renew policies that fail to comply with PPACA requirements, even if consumers like their existing plans. This was not an accident. Forcing all health insurance policies to comply with federal minimum requirements was a key part of the law, and regulations implementing the relevant provisions ensured many plans could not be renewed. As the WSJ reported, the White House always knew that not everyone who liked their health insurance would be able to keep it, even if some thought most affected consumers would be happy to be forced to obtain “better” plans.

According to the President’s announcement, insurance companies will be allowed to renew policies that were in force as of October 1, 2013 for one additional year, even if they fail to meet relevant PPACA requirements. What is the legal basis for this change? The Administration has not cited any. (See, e.g., this letter to state insurance commissioners explaining the change.) According to various press reports, the Administration argues it may do this as a matter of enforcement discretion (much as it did with immigration). In other words, the Administration is not changing the law. It’s just announcing it will not enforce federal law (while simultaneously threatening to veto legislation that would authorize the step the President has decided to take).

Does this make the renewal of non-compliant policies legal? No. The legal requirement remains on the books so the relevant health insurance plans remain illegal under federal law. The President’s decision does not change relevant state laws either.  So insurers will still need to obtain approval from state insurance commissioners. This typically requires submitting rates and plan specifications for approval. This can take some time, and [...]

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Judge Rejects DoJ Motion to Dismiss Second Suit Against IRS Tax Credit Rule

This morning, U.S. District Court Judge Paul Friedman denied the federal government’s motion to dismiss in Halbig v. Sebelius, a suit challenging the legality of an IRS rule authorizing tax credits for the purchase of health insurance on federally run exchanges.  This suit is one of four challenging the IRS rule.  With today’s ruling, the federal government is batting 0-2 in its efforts to dismiss these challenges. A federal district court judge in Oklahoma likewise denied a motion to dismiss in August.

The IRS rule contravenes the plain text of the PPACA, as the statute only authorizes tax credits (and subsidies) for the purchase of insurance in an exchange “established by a state” under Section 1311 of the law.  Federal exchanges are neither “established by a state” nor authorized by Section 1311. Further, as I detailed in an extensive article with Michael Cannon, there is no legislative history or other evidence to support the federal government’s interpretation of the law.  Supporters of the IRS rule claim that Congress could not have intended that Americans in dozens of states would be unable to obtain tax credits to help them purchase insurance. They’re right. Congress intended for every state to create its own exchange, as PPACA supporters said time and again, but states refused. Now that their assumption has been proven wrong, this does not provide an excuse to rewrite the plain statutory text.

The nature of the “mistake” is similar to what we see in other areas of the law. For instance, Congress did not intend for people below poverty line to be without subsidized insurance. Yet that is clearly the result in states that refuse to expand Medicaid because the tax credits and subsidies are only available to people at or above the poverty line. This income floor for [...]

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The Shutdown and the Legal Future of Obamacare (Updated)


Here’s an angle on the late government shutdown that I haven’t seen anywhere else: it was crucial to the potential success of the ongoing lawsuits over Obamacare. I haven’t followed the lawsuits all that carefully, but I think at least the challenge to the subsidies for federal exchanges is quite serious, legally speaking.

As a political matter, though, if the GOP had taken the establishment’s advice, and treated Obamacare as “the settled law of the land,” subject to repeal only if the Republicans win back the Senate and the presidency, I think that and other lawsuits would have been doomed. If the courts were to decide that some major part of Obamacare is unconstitutional or contrary to statute, it would throw a huge program into chaos. Courts don’t like to do that, and they especially don’t like to do that with settled programs that are well-established and have bipartisan support, or even acquiescence. Put another way, if the political arm of the Republican/conservative movement wasn’t willing to expend political capital to challenge Obamacare, why in God’s name would judges be willing to stick their necks out, regardless of how they feel about the law? But the fact that the GOP was in fact willing to provoke a government shutdown–though let’s be clear that, legally speaking, only the president’s veto power can shut down the government if Congress passes a budget–and take the political heat gives the judiciary all the political cover it needs to do rule in favor of the challengers, if it is otherwise inclined to do so.

So if any of the remaining significant challenges to Obamacare succeed, you can thank (or blame) Ted Cruz.

UPDATED: Some commenters seem to be confused about my point here. I’m not (a) saying that this was Cruz’s plan, [...]

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Ezra Klein on the “Obamacare Disaster”

Ezra Klein concludes that the launch of the PPACA’s health insurance exchanges has been a “failure.”

Not “troubled.” Not “glitchy.” A failure. But “so far” only encompasses 14 days. The hard question is whether the launch will still be floundering on day 30, and on day 45. . . .

We’re now negative 14 days until the Affordable Care Act and most people still can’t purchase insurance. The magnitude of this failure is stunning. Yes, the federal health-care law is a complicated project, government IT rules are a mess, and the scrutiny has been overwhelming. But the Obama administration knew all that going in. They should’ve been able to build an online portal that works.

Early on, President Obama like to compare the launch of the Affordable Care Act to Apple launching a new product. Can you imagine how many people Steve Jobs would’ve fired by now if he’d launched a new product like this?

Megan McArdle and Avik Roy have more on what’s behind the failures.

Klein also notes that the failure of the exchange rollout would have been more politically significant were it not for the government shutdown and debt ceiling debate. [...]

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Another ObamaCare “Glitch” – Family Coverage Edition

From USA Today:

Congress defined “affordable” as 9.5% or less of an employee’s household income, mostly to make sure people did not leave their workplace plans for subsidized coverage through the exchanges. But the “error” was that it only applies to the employee — and not his or her family. So, if an employer offers a woman affordable insurance, but doesn’t provide it for her family, they cannot get subsidized help through the state health exchanges.

That can make a huge difference; the Kaiser Family Foundation said an average plan for an individual is about $5,600, but it goes up to $15,700 for families. Most employers help out with those costs, but not all.

“We saw this two-and-a-half years ago and thought, ‘Has anyone else noticed this?'” said Kosali Simon, a professor of public affairs at Indiana University who specializes in health economics. “Everyone said, ‘No, no. You must be wrong.’ But we weren’t, and that’s going to leave a lot of people out.”

It’s almost as if no one carefully read the bill that was passed.  After all, this is hardly the only instance in which the text of the statute does something different than what the supporters had hoped. [...]

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Judge Rejects DOJ Motion to Dismiss Oklahoma Suit Against IRS Tax Credit Rule

Earlier today the U.S. District Court for the Eastern District of Oklahoma rejected the federal government’s motion to dismiss in Oklahoma v. Sebelius, a challenge to the legality of an IRS regulation extending the availability of tax credits to federal exchanges under the PPACA. The text of the PPACA only provides for tax credits in exchanges “established by the State” and otherwise fails to provide for tax credits in federal exchanges, as explained in detail here. The court rejected the federal government’s argument that Oklahoma lacked standing to pursue its claims. Here are early news reports. Another suit against the IRS rule is pending in the federal district court in D.C. [...]

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Hearing on IRS Health Insurance Tax Credit Rule

Tomorrow the Energy Policy, Health Care and Entitlements subcommittee of the House Oversight and Government Reform Committee is holding a hearing on “Oversight of IRS’s Legal Basis for Expanding ObamaCare’s Taxes and Subsidies.” The issue is whether the IRS rule purporting to extend tax credits and cost-sharing subsidies for the purchase of qualifying health insurance in federal exchanges comports with the PPACA. (My answer: No.) I am scheduled to testify, along with Oklahoma Attorney General Scott Pruitt, Dr. Charles Willey (a plaintiff in the D.C. case against the rule), Simon Lazarus of the Constitutional Accountbility Center, and Emily S. McMahon, Deputy Assistant Secretary for Tax Policy at the Department of the Treasury. My testimony is here. It draws upon my article on this issue with Michael Cannon. These posts provide more background. [...]

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Liberty University v. Lew

On Thursday, the U.S. Court of Appeals for the Fourth Circuit decided Liberty University v. Lew on remand from the Supreme Court after NFIB v. Sebelius. The headline is that the panel unanimously rejected Liberty University’s constitutional and statutory challenges to the individual and employer mandates. The court did not find Liberty University’s Commerce Clause challenge to the employer mandate particularly compelling, nor was it moved by Liberty University’s religious freedom arguments. Neither is a surprise. Lyle Denniston has more on the decision here.  [Note: this case involved challenges to the individual and employer mandates, but not to the contraception mandate, which is a distinct legal obligation.]

The interesting and more significant aspects of the Liberty University decision, overlooked by many commentators, involve how the Fourth Circuit handled some preliminary jurisdictional questions. The federal government had argued that Liberty University lacked standing to challenge the yet-to-be-imposed employer mandate and, in the alternative, that the Anti-Injunction Act barred a pre-enforcement challenge to the mandate’s penalty. The Fourth Circuit rejected both of these claims, in addition to the federal government’s argument that the recent decision to delay enforcement of the employer mandate justified putting off legal challenges. This is significant because the federal government has made similar arguments before federal district courts in Oklahoma and the District of Columbia seeking to have challenges to the IRS’ illegal tax credit rule dismissed. According to the Fourth Circuit, these jurisdictional arguments are without merit.

Michael Cannon has more here. [...]

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