How To Handle Victory In King v. Burwell
On Wednesday, the Supreme Court heard oral arguments in King v. Burwell, a legal challenge to the provision of President Obama's national healthcare law that subsidizes insurance premiums for those enrolled in federal health exchanges.
The justices considered whether the IRS acted outside its authority when it permitted subsidies to healthcare.gov enrollees in the 37 states that did not establish their own insurance exchanges.
The plaintiffs had a strong case, as the letter of the law states that subsidies are available only "through an Exchange established by the State." The IRS defined a state exchange as a "State Exchange, regional Exchange, subsidiary Exchange, and Federally-facilitated Exchange," taking the pressure off states to establish their own exchanges. The subsidies were designed to encourage the creation of state exchanges.
What should be done if the IRS's actions are found to be illegal? One interesting post-King proposal comes from Galen Institute President Grace-Marie Turner and Economics21 Director Diana Furchtgott-Roth.
A Supreme Court ruling in favor of the plaintiffs would force Congress and President Obama to the negotiating table. Besides passing legislation that allows already-promised subsides to remain, this could be used as an opportunity to return flexibility and state control to health insurance markets.
As Turner and Furchtgott-Roth explain, "the 37 states without exchanges could receive a new, capped allotment from the federal government that we call Health Checks. States could use the allocation to provide immediate premium assistance to people affected by the court decision, and similar checks could be extended to others who would need insurance afterward."
These funds would be distributed through the same mechanism states use for the Children Health Insurance Program, which is already managed by states and covers nearly 9 million children.
An advantage Health Checks hold over exchange subsidies is the absence of burdensome ACA regulations that require plans to include mental health coverage, pediatric healthcare, drug addiction treatment, and maternity care, regardless of need. Paying for unnecessary coverage raises health insurance costs without leading to greater benefits.
More health insurance options would lead to lower premiums for young people, many of whom would prefer to have low-cost, catastrophic coverage.
Insurance is meant to protect against rare and unexpected medical events, such as automobile accidents, sports injuries, or major illnesses. In a proper health insurance market, regular, expected healthcare costs, such as birth control, would be paid for out of pocket instead of being covered by insurance providers. American health insurance has grown far beyond the typical purview of insurance, and the ACA only exacerbates this trend.
As Manhattan Institute Fellow Yevgeniy Feyman argues, catastrophic coverage that carries high deductibles should be welcomed, not avoided. It makes sense for many healthy individuals to purchase high-deductible plans with lower monthly premiums.
High-deductible plans also create incentives for people to seek out cost-effective care, since they are responsible for paying their healthcare costs until their deductible thresholds are reached. Retail clinics that offer walk-in care are often cheaper than doctors' offices or emergency rooms, and generic drugs offer the same results at far lower costs.
As Feyman explained to me, "True catastrophic insurance not only encourages patients to seek out the lowest-cost providers, but also helps save for healthcare needs down the line thanks to premium savings. More importantly, getting more patients enrolled in high-deductible plans will increase the urgency for transparency in healthcare."
Forcing the government to comply with the ACA would offer an opportunity to improve delivery of healthcare. Congress should take advantage of this and restore flexibility and greater choice to states and individuals.
This piece originally appeared in Washington Examiner
This piece originally appeared in Washington Examiner