Affordable Care Act — July 22, 2014 at 2:35 pm

Did Republicans conspire to deny their residents billions in tax credits?


Workers are just pawns in the GOP’s sabotage game


In a 2-1 decision, the U.S. Court of Appeals for the D.C. Circuit ruled that federal tax credits cannot by awarded to anyone who purchased health insurance from the marketplace the federal government set up in 36 states.

(And just a few hours later, the Fourth Circuit Court ruled in “precisely the opposite direction” on a related case.)

Taxpayers who earn more than 138 percent of poverty level and less than 400 percent, according the government’s interpretation of the law, should receive credits to help them pay their insurance premiums.

These 36 states who rely on the federal exchanges are primarily Republican-led and if the D.C. decision is upheld, two dozen of them will be offering neither Medicaid expansion nor subsidies to help residents purchase health care. This decision, which will likely be reviewed by the entire D.C. Circuit then the Supreme Court, more or less would repeal the law in these states.

“In Michigan, 272,539 people are paying an average monthly premium of $97 — and repeal would result in an average monthly loss of subsidies/cost increase of $246,” The Washington Post‘s Greg Sargent explains.

Michigan’s Republican-led legislature refused to build its own exchange.

Democrats and the administration argue that a drafting error resulted in funding for the state exchange’s credits being left out. The majority in Tuesday’s D.C. decision counters that they could find no “intent” in the law for that argument, essentially saying that the law’s drafters meant to force states to build their own exchanges or render the law useless in these states, gutting their own law.

If that argument holds, Republican governors who rejected building an exchange pursued a strategy that would purposely deny their residents tax credits in order to sabotage the law.

The New Republic‘s Alec MacGillis explained this conspiracy led by CATO Institute’s libertarian health care expert Michael Cannon and others last year as trouble with the federal website seemed to threaten the entire law:

To build the legal case, Cannon spent a lot of time traveling around the country during the past few years—with visits to more than a dozen states and calls to far more—explaining to state officials opposed to the law that, if they simply refused to set up exchanges of their own and thereby shunted their citizens onto the federal exchange, they would greatly raise the odds of the law’s total collapse if and when the courts agreed with him that the federal exchange couldn’t award subsidies.

Cannon was hardly the only activist making the rounds urging states against cooperating with the law—the American Legislative Exchange Council and Koch Brothers-backed Americans for Prosperity were doing so as well. But Cannon’s argument undoubtedly helped some states overcome their natural states’ rights inclination to handle their business on their own. As he put it in May 2012 in an online symposium organized by Tea Party-affiliated FreedomWorks, “The biggest challenge in convincing states not to create Exchanges is this. Lots of state officials, including conservative ones, have been sold on the idea that ‘if we don’t create an Exchange, the feds will IMPOSE one on us.’” Among those whom he helped to dissuade were New Hampshire and Maine…

Cannon celebrated Chris Christie’s decision to not build his own exchange, calling it “the most powerful tool available to states to block Obamacare.”

We know that Republicans are willing to deny their residents health insurance their state is being charged for anyway. The outrage at the refusal to expand Medicaid has been muted sadly because it only hurts those around the poverty level.

Now there is a second question to ask swing state Republican governors like Christie, Rick Scott and Scott Walker and state legislatures like Michigan’s: Did you refuse to build a health care exchange in order to deny middle class workers tax credits? And what will you do if these credits are taken away?

[Image by Peter Stevens | Flickr]

[UPDATE: This post has been updated to reflect that Michigan’s state legislature blocked the construction of a state exchange.]