How the Budget Deal Smashes GOP Hopes to Derail the Obamacare Exchanges

You know how Indiana is going to court to try to make sure that their citizens can't get health insurance subsidies, because their citizens getting those subsidies apparently hurt the state's legal right not to establish an exchange? Today's total Republican cave on reopening the government and withdrawing their threat of default may have just nipped that lawsuit at the bud.

We have already discussed here at TPV why arguments like Indiana's are already wholly without merit, but with the actual language of today's deal makes things much worse for them. In what is generally thought to be the only "victory" for the Republicans in this deal is actually the language that slaughters those challenges. The only thing Republicans got included is a requirement to verify eligibility for those who get a subsidy in the exchanges that are part of the Affordable Care Act.

What am I talking about? Follow me here.

The lawsuits are based on a bizarre theory that the ACA only authorizes the subsidies for exchanges established by a state, and are therefore inoperative for exchanges established by the federal government for a state that does not establish its own. As I mentioned before, we have already debunked that theory within the contours of the ACA. But now the GOP cave, formally known as the Continuing Appropriations Act of 2014, includes this language:
Notwithstanding any other provision of law, the Secretary of Health and Human Services (referred to in this section as the ‘‘Sec- retary’’) shall ensure that American Health Benefit Exchanges verify that individuals applying for premium tax credits under section 36B of the Internal Revenue Code of 1986 and reductions in cost-sharing under section 1402 of the Patient Protection and Affordable Care Act (42 U.S.C. 18071) are eligible for such credits and cost sharing reductions consistent with the requirements of section 1411 of such Act (42 U.S.C. 18081), and, prior to making such credits and reductions available, the Secretary shall certify to the Congress that the Exchanges verify such eligibility consistent with the requirements of such Act.
The Affordable Care Act clearly defines federally established state exchanges as "American Health Benefit Exchanges" by allowing the Secretary to establish "such exchanges" in case a state fails to. And now, the Continuing Appropriations Act instructs the Secretary to certify confirmation of eligibility for those subsidies for people participating in... wait for it... the Health Benefit Exchanges! And it does sospecifically under the same IRS regulation that the administration used to confirm that state-established exchanges and exchanges the federal government is forced to established because of a state's failure to do so (funny how none of the Republicans talk about the "plain language" of the law that states, plainly, that each state "shall establish" an exchange) are legally the same.

Basically, by passage of this section, Congress is affirming that the IRS rule is within its legal purview, and more significantly, that people who get insurance through state exchanges established by the federal government are in fact eligible for the subsidies (and cost-sharing reduction, when applicable). After all, the Secretary cannot verify your income if you can't get the subsidy in the first place!

Seen through this light, the budget deal isn't just a victory for common sense and the president in that he held firm against Republican demands of ransom for the Congress to simply do their job, the income verification portion of the bill was also a Democratic victory, effectively racking up arguments against - if not outright quashing - legal challenges to try to take away subsidies from the federally established exchanges.