The law defines a health insurance exchange as a "governmental agency or nonprofit entity that is established by a state" in one section of the law, and then says later that individuals who participate in exchanges under that definition are eligible for subsidies. Because the law only says a "state" and not "a state or the federal government," Cannon and Adler argue that the federal government cannot legally dole out subsidies or tax breaks to people who buy insurance from federal exchanges.They are referring to section 1311 of the law, which states, "IN GENERAL.—An Exchange shall be a governmental agency or nonprofit entity that is established by a State." Then, Section 1401 states that the credits apply to individuals and dependents who "were enrolled in through an Exchange established by the State under 1311." Problem is a section between the two of them, Section 1321, which states clearly that should a state be unwilling to establish such an exchange,
the Secretary shall (directly or through agreement with a notfor-profit entity) establish and operate such Exchange within the State and the Secretary shall take such actions as are necessary to implement such other requirements.What is this such exchanges stuff? You see, in the law, exchanges are established in Sec. 1311, and then gives the HHS the authority to establish "such" exchanges in Sec. 1321. It doesn't take a Yale law degree to understand that an exchange established by the HHS is for all legal purposes the same as an exchange established by a state. There is no legal distinction.
Of course, if this sounds familiar to the readers of TPV, that's because it is. This line of attack on health reform is not new. The Wall Street Journal editorial page concocted this stupid theory in November of last year, and I rebutted it at the time.
So why recycle the lie now? One might think that after the Supreme Court upheld "Obamacare," conservatives are just lashing out. I think it's a little more complicated than that. After the Supreme Court's decision on the law, state governors and legislatures - with the usual exceptions - are having to think long and hard about whether they want to establish an exchange, or whether they want to let the federal government run it for them. Should Republicans in states make the latter choice, they could face charges that they willingly handed over control to the federal government. States, including Republican states, are now seriously looking at establishing exchanges.
But that runs into another conservative anathema. If Republican states establish exchanges, they will have ceased "fighting" that Kenyan negro, and that is a no no among the Teahadists. If they establish the exchanges and follow all the rules set out in the ACA, heck, the damn thing might succeed and then Barack Obama will get credit for it. That action will bring the competition among states - the debate will no longer be about why Obamacare is the same as Nazicare, but about which state is doing the best job running those exchanges. Which, in turn, would mean that Republican policymakers in Republican states will have to implicitly admit that government has a role to play in making people's lives better.
So the conservative movement is basically stuck between Barack and a hard place. If red states don't run their own exchanges, they will be violating the conservative tenet to keep control closest to the states whenever possible. If they do run their own exchanges, they will be implicitly admitting that government can be good.
So why not find a third way? The third way being of course to give conservatives an excuse not to set up the exchanges by pretending that the exchanges set up by the federal government will be weakened. That will hurt Obamacare. And, to top it off, when the exchanges set up by the HHS inevitably and legally offer all the benefits of the exchanges to their users - including the subsidies - the Republicans will get to scream and moan that the federal government (and the re-elected "foreign usurper uppity" guy) is engaged in a power grab.
Fantasy? Sure. But think about it. Have Republicans come up with a single constructive proposal since Obama became president?