Last December I wrote about the legal and legislative challenges to the Affordable Care Act that would arrive in 2014. The big enchilada was always Halbig v. Burwell (previously v. Sebelius), a lawsuit with a helpfully direct purpose: Libertarians wanted to kill the ACA by getting a court to end subsidies in states that did not set up their own exchanges. At several points in the law, the subsidies were earmarked for such exchanges, and because the law passed with few drafting changes (in the panic after Scott Brown's win in Massachusetts), libertarians saw a way to take millions of Americans out of the Obamacare regime.
Today, as many liberal legal observers feared would happen, the libertarians won in the D.C. Circuit. A 2–1 panel sided with the plaintiff, and remanded "with instructions to grant summary judgment to appellants and vacate the IRS Rule"—i.e., the IRS's intrepretation that the drafters of the law did not mean to cut states off from subsidies if they merely used the federal government's exchange. Judge Raymond Randolph (a George H.W. Bush appointee) and Judge Thomas Griffith (a George W. Bush appointee) found this argument compelling, though they ruled more in sorrow than in anger.
At least until states that wish to can set up Exchanges, our ruling will likely have significant consequences both for the millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly. But, high as those stakes are, the principle of legislative supremacy that guides us is higher still.
Well, yes: It means at least 4 million people, who signed up for Obamacare in states that chose not to set up exchanges (or in the case of Oregon, tried and failed to set up their own), are currently panicking about the threat of erased subsidies and higher payments. Why do I attribute this to libertarians? Like I wrote in 2013, and like Alec MacGillis has been writing, the Halbig case's chief advocate was Michael Cannon, a Cato Institute scholar who had previously campaigned to stop states from setting up their own exchanges.
Cannon's goal, stated bluntly and frequently, was that Obamacare had to be brought down by any means necessary. States that did not set up exchanges were in a better position to sue the government. Fewer people in the exchanges meant higher overall costs. To insurers, the "death spiral" was an apocalypse scenario; to Cannon, it meant freedom.
"A victory for the Halbig plaintiffs would not increase anyone’s premiums," he wrote Monday.* "What it would do is prevent the IRS from shifting the burden of those premiums from enrollees to taxpayers. Premiums for federal-Exchange enrollees would not rise, but those enrollees would face the full cost of their 'ObamaCare' plans."
This is the Leninism I'm referring to in my headline. Cannon's no socialist—quite the opposite!—but he saw a solution to the Republican crisis of watching people grow used to new entitlements. Rip the entitlement away, weaken the system, and a painful short term would give Congress no choice but to undo the law. Take away some of the beams, and what do you know? The roof collapses.
The liberal panic about this decision is ... well, not muted, but not quite Hobby Lobby-level. That's because last year the Senate Democrats changed the filibuster rules that covered nominees to executive branch jobs and courts below the Supreme Court. That allowed three stalled Obama nominees onto the court, which ended a long-running conservative supermajority on the D.C. Circuit. And that's why the ideal liberal plan is now to go en banc and cross fingers as a larger panel of judges tosses out the decision of the two GOP appointees.
*Correction, July 22, 2014: This post originally misstated that Michael Cannon's Monday column was written last week.
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