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Well, someone is wrong … and my money is not on the governor

Well, someone is wrong … and my money is not on the governor

Wayne Hoffman
July 31, 2014

A federal appeals court ruling issued last week puts Idaho in a bit of an awkward spot when it comes to the state insurance exchange that the Legislature and Gov. Butch Otter opted to create in 2013. If the ruling stands on appeal at the U.S. Supreme Court, Idaho’s insurance exchange will become the catalyst for enforcing the Obamacare individual and employer mandates and related taxes.

The exchange will also be the vehicle for running a fairly new entitlement program costing millions of dollars. In other words, had lawmakers not enacted an insurance exchange, the best guard against Obamacare would have been refusal to go along with Obamacare.

Yet Otter, whose biggest legislative accomplishment to date was the creation of the insurance exchange, issued this statement after the court’s July 22 ruling: “While it has no immediate impact on Idaho, I hope the decision in the D.C. case eventually carries the day before the U.S. Supreme Court and leads to the end of Obamacare. But for now, it doesn’t reduce or eliminate federal control over health care matters in states with federal exchanges. If anything, the uncertainty from today’s conflicting decisions could make things worse for them.”

Before I elaborate on Otter’s statement, allow me to explain why this litigation, also known as the Halbig case, is so significant for Idaho: Halbig argues that the Internal Revenue Service overreached when it wrote regulations allowing residents in any state to apply for tax subsidies to defray the cost of insurance premiums.

The Affordable Care Act is a complex piece of legislation, but it very clearly says subsidies can only apply in states that set up a state insurance exchange. States that do not go along with Obamacare and have a federal exchange can’t have residents applying for and accepting tax subsidies

This is critical because, says the Obamacare law, if no state exchange exists, there can be no entitlement program in the form of tax subsidies and insurance mandates against employers and individuals will not stand.

IRS ignored the distinction between states that set up an insurance exchange and states that don’t, thus the Halbig case. The D.C. court ruled that the IRS was wrong. A different appeals court ruled the IRS was right, and now the case is expected to advance.

A pro-Halbig ruling does the opposite of what Otter says it does. I asked for clarification from Mark Warbis, the governor’s communication’s director. Said Warbis, “the statement speaks for itself, IF you read the entire first sentence and keep it in context … ‘and leads to the end of Obamacare.’ IF that were to occur, there would be no more exchanges, federal/state or otherwise.

That’s ALL that was intended, and ALL that it means. Don’t try to stitch together some insidious hidden meaning, Wayne. There isn’t any.”

However, and here’s the problem, it’s quite likely that a positive ruling from the U.S. Supreme Court would not summarily end Obamacare. More likely, Idaho would be one of a minority of states operating an insurance exchange, and pressured to keep it running in order to keep the subsidies in place. Other states would have a marketplace to buy insurance (albeit run by the federal government) but no subsidies and no fear of government mandates and taxes.

I believe Otter is sincere when he says he wants Obamacare to go away. He just doesn’t yet appear to understand how the state’s decision to create an insurance exchange helps Obamacare more than it helps Idaho and its citizens.

A U.S. Supreme Court ruling in favor of Halbig and against the IRS will most certainly clear it up for him.

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