GOP Cheers High Court's Hearing of Challenge to ACA 'Pyramid Scheme'
by Todd Beamon
November 07, 2014
Republicans cheered the Supreme Court's decision to hear a challenge to the subsidies that are the backbone to Obamacare, saying that ruling in favor of the appeal would effectively destroy President Barack Obama's signature domestic achievement.
"If they end up throwing it out, I don't see how Obamacare survives," Texas Rep. Steve Stockman told Newsmax. He was referring to the tax credits that have helped more than 4 million people in 36 states afford health coverage.
"The whole pyramid scheme is based on forced dues, and if you don't force dues, and you don't force the states to subsidize, then a lot of people are not going to be able to afford it without that subsidy," Stockman added. "The administration is going to be forced to change it."
Former House Speaker Newt Gingrich told "MidPoint" host Ed Berliner on Newsmax TV that with a ruling in favor of the appeal, the high court would have "devastated Obamacare in two thirds of the country."
"As a non-lawyer, it's pretty hard to read the law and not believe that it is illegal to have subsidies in 36 states," Gingrich said.
And former Arkansas Gov. Mike Huckabee likened any such affirmation by the justices to "taking the air out of the balloon."
"You have nothing," he told Fox News' Neil Cavuto. "It guts it. It is the repeal, for all practical purposes.
"It gives the Republicans a reprieve from having to go in and say, 'We're going to repeal it,'" Huckabee said.
In a surprise decision, the Supreme Court agreed to hear an appeal by four Virginia residents seeking to block the Obamacare subsidies in 36 states. The appeal says the administration is engaging in a "gross distortion" of the law’s wording by granting billions of dollars in tax credits to people in those states.
If the nine justices block the credits, it could unravel the law — negate other Obamacare provisions and potentially destabilize insurance markets in much of the country.
The move to hear the case comes just days before the start of the law’s second open-enrollment season on Nov. 15. The court, which upheld much of Obamacare two years ago on a single vote, is expected to rule in the case by June.
"What’s striking is they don’t seem to want to wait very long with respect to this issue of Obamacare," attorney and legal analyst Kendall Coffey of Coffey Burlington in Miami told "The Steve Malzberg Show" on Newsmax TV.
"The Supreme Court isn't waiting to see what a lot of different circuit courts of appeal around the country will do," Coffey added. "This time, they're moving ahead with the issue — and it's got to be somewhat ominous for the administration because of the interest the Supreme Court has shown."
Seven Republicans filed a brief supporting the appeal.
They include two Texas senators, Minority Whip John Cornyn and freshman Ted Cruz; two from Utah, Sens. Orrin Hatch and Mike Lee; Florida Sen. Marco Rubio, as well as Reps. Dave Camp of Michigan and Darrell Issa of California.
"President Obama’s health law was pushed on the American people through a highly partisan effort that never did an adequate analysis of the government’s authority to provide premium subsidies through exchanges established by the federal government," said Issa, chairman of the House Oversight and Government Reform Committee.
"The sloppy and rushed nature of the process that created the health law is rightly catching up to it," he added. "The statute provides no authority for subsidies through the federal exchange, and proponents of the law cannot cover up their regrets by ignoring the plain text of the law when it proves inconvenient."
The appeal centers on four words in the Affordable Care Act that was signed into law in 2010: The law says that Americans qualify for tax credits when they buy insurance on an online marketplace that was "established by the state."
However, only 14 states have their own marketplaces, known as exchanges. The remaining states have left the task to the federal government, which is allowed under the law.
The issue is whether people can collect the subsidies even if they buy policies on the federal exchange, generally through the HealthCare.gov website.
Under a rule issued by the Internal Revenue Service, consumers can claim the tax credits no matter where they live or where they bought their insurance. The Obama administration says the IRS approach is consistent with Obamacare's aims.
In July, a federal appeals court in Richmond, Va., upheld the IRS regulation on a 3-0 vote. But on the same day, another federal appellate court — this one in Washington — reached the opposite conclusion, rejecting the administration’s position in a 2-1 ruling.
Americans are required to have health insurance under Obamacare's individual mandate or else be fined by the government. For employers, Obamacare requires them to provide healthcare for employees working more than 30 hours per week.
The employer mandate affecting companies with 50 or more workers was delayed by the Obama administration until next year.
"The crafters of the law envisioned that states would set up their own exchanges and put incentives into place like these in the states that would establish their own exchanges," Ann Purvis, senior research fellow for the National Center for Policy Analysis in Dallas, told Newsmax.
"But states surprised the federal government — and when only 14 states set up their own exchanges, the administration felt like they needed to act. They came in and said, 'Well, we're going to provide subsidies to everyone.'
"They just basically rewrote the law — and that's what the court's going to look at," Purvis said. "This is really going to be a case about straightforward statutory interpretation."
The subsidies are the linchpin of Obamacare because they make insurance affordable, since the law limits healthcare costs to 8 percent of personal income, Purvis added.
"These subsidies are artificially lowering the price of people's health insurance premiums. If those subsidies go away, premiums are going to shoot up.
"These subsidies are keeping insurance costs to less than 8 percent of income, so if those go away, those premiums are going to rise — and these people will not be required to carry insurance and won't be required to pay the penalty," Purvis said.
A Supreme Court ruling against the Obama administration would open a new period of uncertainty about the future of American health care. More than half of the 7.3 million people who have bought Obamacare policies would not be entitled to the subsidies they are receiving.
The court's latest move adds even more confusion to Obamacare, Purvis told Newsmax.
"It's a confusing law for a number of reasons — and I think it illustrates the problem of when the government comes in and tries to plan something as complex as a health insurance market.
"You've got people up in Washington writing this law and it’s pretty complicated," Purvis added. "It's full of holes. It's full of problems — and it's being litigated all over, and people are still trying to figure it out. That's going to continue, as long as it's in place."