The deafening silence by the mainstream media on an interesting aspect of ObamaCare borders on conspiratorial. An article last week by Ramesh Ponnuru at Bloomberg News brought it to my attention for the first time, although it turns out there have been mentions of it going back a few months in other new media venues.
The debate over President Barack Obama’s health-care law has taken another twist. Now conservatives and libertarians are defending it, while the administration tries to toss part of the legislation out.
The reason for this role reversal is that the drafters of the law outsmarted themselves and handed their opponents a weapon. Now they would like to pretend the law doesn’t say what it does.
Obama’s plan makes tax credits available to people who get health insurance from exchanges set up by state governments. If states don’t establish those exchanges, the federal government will do so for them. The federal exchanges, however, don’t come with tax credits: The law authorizes credits only for people who get insurance from state-established exchanges. And that creates some problems the administration didn’t foresee, and now hopes to wish away.
Legislative debate over the law didn’t go into great detail about these provisions. We can surmise what happened, though. Supporters of the legislation wanted to encourage states to set up the exchanges. So they offered the states a deal: If they did so, they would get to write their own rules, and their citizens would be able to get the tax credit. The states would also gain extra flexibility on Medicaid spending. The law’s supporters also expected the health-care law to become more popular over time.
That hasn’t happened. Many states are determined in their opposition, and few of them have set up exchanges. If they don’t do so, the tax credits don’t go into effect and the federally established exchanges won’t work: People won’t be able to afford the insurance available on them without the subsidy.
States have another incentive to refrain from setting up exchanges under the health-care law: It protects companies and individuals in the state from tax increases. The law introduces penalties of as much as $3,000 per employee for firms that don’t provide insurance — but only if an employee is getting coverage with the help of a tax credit. No state exchanges means no tax credits and thus no employer penalties. The law also notoriously penalizes many people for not buying insurance. In some cases, being eligible for a tax credit and still not buying insurance subjects you to the penalty. So, again, no state exchange means no tax credit and thus fewer people hit by the penalty.
Of course, just as with so many things they find inconvenient or contrary to their agenda, the administration will simply ignore or attempt to bypass the parts of the law that don’t fit their template, but the more they do that the more potential there is for numerous lawsuits.
Ponnuru ends with this zinger:
The health-care plan the Obama administration got enacted isn’t going to work. That doesn’t mean they get to rewrite the law unilaterally as they go. It means they should have passed a different law.
I hope this comes to light before a national audience during one of the next 3 debates, and perhaps this whole ill-advised, fraudulently conceived, rotten piece of legislation will just unravel on its own. That would be poetic justice.