Under Obamacare, states were required to establish health insurance exchanges. If states didn’t, the law allowed the federal government to step in and and operate the exchange. Thirty-six states, including Michigan, let the federal government run the show.
Here’s the problem. The law states that individuals qualify for insurance subsidies if they enroll in an exchange “established by the state.” It doesn’t say anything about federal-run exchanges. Yet the IRS chose to apply subsidies to both state and federal exchanges.
“The law is actually pretty clear,” says Michael Cannon, director of health policy studies at the Cato Institute. He’s made this argument the past few years and is pleased with the Halbig decision.
Without these generous subsidies, which benefit about half of individuals qualified to purchase coverage on the exchanges, the plans go from being a good deal to a raw deal as the true costs are revealed. In Michigan, 237,337 residents receive federal subsidies.
Since the whole point of Obamacare was to insure everyone, especially those who couldn’t afford it, this development has the potential to undercut the very heart of the law.
As inconvenient as it may be for Obama, it’s Congress’ job to pen laws. The administration says it wasn’t Congress’ intention to limit subsidies to state exchanges. But the language is not ambiguous.