Obamacare authorizes subsidies for health insurance bought on an exchange “established by a state.” So far, 34 states have refused to establish such exchanges, and people in those states are signing up — or trying to, God bless them — for insurance and subsidies on the federal exchange.
Can people using the federal exchange get subsidies? A federal judge has refused to dismiss a case, Halbig v. Sebelius, arguing they can’t. Eventually, this will go to the Supreme Court.
If people in more than half the states can’t get subsidies, it’s going to be a disaster for them and for Obamacare.
The other disaster — and it’s already here, it’s not just a possibility — is that the statute doesn’t provide subsidies for people who qualify for Medicaid. You either get Medicaid or you pay full freight. But half the states have refused to expand Medicaid under the ACA, even though the federal government pays 100% of that expansion for three years and 90% thereafter. We’re talking about 8 million people who would qualify for expanded Medicaid not getting it. By upholding Obamacare as constitutional, but finding that states can refuse to expand Medicaid, the Supreme Court created the absurd situation where people making too much for Medicaid get subsidies, but their poorer brethren don’t. The most desperate are being denied.
When the ACA was drafted, it was just assumed that every state would expand Medicaid (since it would save states billions of dollars in paying for the uninsured) and would establish an exchange. The Dems believed that GOP governors and legislators wouldn’t cut off their noses to spite their faces. There’s a lot of red states with unattached noses.
Since the federal tax subsidies are provide through a tax credit I don’t see how a federal court or the Supreme Court could find it unconstitutional. Right now anyone who receives healthcare insurance through their employer in effect receives a federal tax deduction because the premium paid by the employer is not taxed as income. My understanding is that those who qualify for the Medicaid expansion but can get it because their governor is an A-hole won’t be required to buy it on the exchange nor will they have to pay the penalty. They are just screwed because they can’t get coverage.
They won’t have to pay the penalty, but they won’t have any health insurance.
People with employer-provided health insurance don’t get a tax deduction, the employer does, not including it as income is a different matter. People who buy their own insurance don’t get a tax deduction. I don’t see this as providing legal justification for subsidies under the federal exchange when the statute explicitly says “a state.”