Let states decide on joining federal healthcare plans

This commentary originally appeared in the Fort Worth Star-Telegram on June 19, 2015. 

Any day now, the U.S. Supreme Court will decide King v. Burwell, the latest challenge to the Affordable Care Act.

The ruling will determine whether millions of Americans in 34 states can keep receiving subsidies to purchase health coverage through federal exchanges.

Much of the coverage about Burwell has been about what Congress will do if the court decides subsidies are not allowed on federal exchanges.

But the subsidies are not the most important thing about this case. Far more important are the principles at stake: the rule of law and the separation of powers.

Equally important is the related principle of federalism, which recognizes states as separate, sovereign entities that cannot be commanded or commandeered by Washington, D.C.

The challengers in Burwell claim the Obama administration illegally issued subsidies for health insurance on those federal exchanges in clear violation of the law, which stipulates that subsidies may only be administered through “an Exchange established by the State.”

Some states, 34 including Texas, refused to set up ACA exchanges. Since the federal government can’t simply command states to do the bidding of the White House, the feds were obliged to set up federal “fallback” exchanges.

The challengers in Burwell claim the administration’s response, which was to treat federal and state exchanges as the same thing, violated the law and resulted in billions of dollars in taxes and spending that Congress never authorized.

They contend that, since these federal exchanges were not “established by the State,” as required by the law, federal subsidies are not allowed on them.

A ruling for the challengers would mean that some 6.4 million Americans would lose those subsidies.

The big question now, in much of the media, is what will congressional Republicans do if the court rules for the challengers? Will the GOP-controlled Congress bail out the troubled healthcare law or allow the court to “gut” it?

But that misses a larger point: States should be free to opt in or opt out of the ACA exchange system, just as the court in 2012 ruled that states are free to opt in or out of the law’s Medicaid expansion.

The truth is, the two cases are quite similar.

In 2012, the high court ruled in NFIB v. Sebelius that the ACA’s provision making all federal Medicaid funds dependent on a state’s expansion of the program under the ACA violated the constitutional principle of federalism.

Chief Justice John Roberts called it coercion, “a gun to the head” of the states.

The Burwell case is also about coercion. The ACA imposed onerous regulations on state health insurance markets — age-rating rules, actuarial value restrictions and benefit mandates — that dramatically drove up the price of health insurance on the individual market.

That’s why subsidies were necessary, to make up for the cost increases brought on by new ACA regulations.

Instead of restoring subsidies on federal exchanges, Congress should be working to remove ACA insurance regulations in states where subsidies are not allowed, thereby driving down the cost of insurance for everyone.

In Texas, that would mean more than 2.8 million people would pay less for coverage than they do now — including those currently on the exchange.

Exempting Texas from the ACA’s costly insurance regulations would drive down premiums by more than $1,000 for some Texans. Even those near retirement age would see their premiums plunge by nearly $600.

The Burwell case is about whether the law means what it says — no small thing. But the debate over what to do about this troubled law should extend beyond the subsidy question.

States like Texas made a clear choice not to go along with the ACA, and they should be allowed to remain free from it — all of it, including the subsidies and the regulations that make subsidies necessary.