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Bloomberg View: No, Obamacare isn’t dead

First Published Jul 23 2014 06:48 am • Last Updated Jul 23 2014 06:49 am

It’s too soon to panic — or celebrate, as the case may be: Obamacare isn’t dead. And given the flimsy logic of the latest legal argument against it, there’s a good chance it never will be.

The excitement began Tuesday morning, when a panel of the U.S. Court of Appeals for the District of Columbia Circuit ruled in Halbig v. Burwell that Obamacare, also known as the Affordable Care Act, doesn’t permit federal subsidies for health insurance in states that haven’t established their own exchanges. If that interpretation took effect today, it would leave 4.7 million people in 36 states without federal assistance for their premiums.

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It’s true that stripping federal subsidies from that number of people — 58 percent of all enrollees — would be disastrous for Obamacare, destabilizing federally run exchanges and ruining the law’s goal of making insurance widely affordable.

Yet just hours after the Halbig ruling was issued, a panel of judges in Virginia reached the opposite conclusion — underscoring that the legality of the federal subsidies is far from settled.

Both decisions can’t be correct, of course. The ruling in favor of Obamacare, at least, has the advantages of good sense and practicality. At issue is language in the Affordable Care Act authorizing subsidies for people "enrolled in through an Exchange established by the State."

Opponents say this means only state-based exchanges can have subsidies. What’s far more likely is that the clause was poorly worded. After all, in drafting the law, Congress never voiced or demonstrated any intent that people buying insurance on the federal exchange should not be eligible for the subsidies.

The legal battle now moves to the full D.C. Court of Appeals and perhaps from there to the Supreme Court. The worst-case scenario is that the strict-constructionist view of the dispute will prevail. Even then, however, Obamacare can survive — if state policymakers take the opportunity to set up their own exchanges.

This prospect is far less daunting now that the first enrollment season is through, and plenty of states — and the federal government, too — have shown the way. State-based exchanges have certain advantages over the federal exchange: States can tailor marketplaces to reflect the local insurance market.

The better scenario is that Congress clarifies its intent by amending the law. One obstacle here is that neither party to the suit is arguing the law was badly written. Another is that since Republicans took control of the House of Representatives, they have voted more than 40 times to repeal, weaken or delay the law. Congress can’t be counted on to help fix Obamacare.

The best-case scenario is that judges recognize this latest legal attack on Obamacare for the ploy that it is — and simply let subsidies on the federal exchange continue.

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