“Kick Millions Off Health Insurance” To Save Four People . . . Nothing?

Media battalions daily eye-ball every spike and dip in the Affordable Care Act’s implementation odyssey.  On May 14, however, nearly to a person, they passed up a noteworthy event: a Fourth Circuit Court of Appeals hearing in Richmond, Virginia, involving one of a phalanx of Koch-backed lawsuits, that could, if successful, in the exuberant vernacular of columnist George Will, “blow [the ACA] to smithereens.”  Much has been written about these cases, by ourselves and others, since conservative uber-litigator Michael Carvin filed in the District Court for the District of Columbia a complaint identical to the (subsequent) one at issue in the recent Fourth Circuit appeal. (Two other similar challenges are percolating in Federal district (trial) courts in Oklahoma and Indiana.) But, unnoticed by the press, in this recent hearing, high-voltage verbal duels broke new ground. 

Visibly animated, two of the three judges on the Fourth Circuit panel not only skewered the legal basis for the lawsuit – as had the two federal trial judges who earlier this year dismissed the claim (in the case now before the Fourth Circuit appeals court and the earlier-filed D.C. case). They questioned, as a matter of political and social injustice, Carvin and his backers’ desperation attempt to upend the ACA.  In particular, Judge Andre Davis fired off one of the most telling sound-bites yet articulated by the law’s defenders over the course of this litigation.  “You are asking us,” Judge Davis capped off an especially testy exchange near the end of the session, “to kick millions of Americans off health insurance, just to save four people [Carvin’s four individual plaintiffs] a few dollars.”  Davis had earlier foreshadowed that zinger, interrupting Carvin soon after he launched his argument, to chide him for bringing his case on behalf of four lone individuals instead of as a class action on behalf of all similarly reluctant premium assistance beneficiaries; the judge suggested that in fact Carvin could never assemble such a broad class: “No one wants what you want,” he scolded.

Davis here zeroed in on an issue that had not greatly interested the judges who previously considered Carvin’s claim: the actual “plight” that supposedly motivated the individual plaintiffs who signed the complaint to bring the case.  Carvin seemed to take Davis’ skepticism about his clients’ grievances as a challenge to their legal “standing” to get into court to air his challenge to the Obama Administration’s interpretation of the ACA.  As this litigation has played out, this standing issue has been a sidebar to the main battle over the merits of the challengers’ claim.  But Carvin missed Judge Davis’ point.  His acerbic comment was aimed, not at a procedural technicality, but at the real-world significance of Carvin’s substantive claim.  By pitting negligible economic harm for a handful of individuals, however sufficient to give them standing to sue, against a benefit – access to health insurance – critical to millions, Davis implicitly cast the litigation as the would-be political coup its architects tout out of court, intended to “drive a stake through the heart of the ACA.” 

As it turns out, Judge Davis actually understated the problem, or rather, overstated how much the plaintiffs actually stand to lose, if the ACA provisions targeted by their suit are held lawful. The challengers’ legal claim is that, as Will noted, a “four-word phrase” in the 2700 page ACA should be interpreted to authorize the government to provide “premium assistance” tax credits and subsidies prescribed by the law to enable low and moderate income individuals to purchase health insurance on statewide insurance market-places, called “exchanges”  — BUT only in states where the state government opted to set up and run its own exchange, NOT in (the currently 36) states which opted to leave to the federal government (Healthcare.gov) the task of running the exchange for their residents.  In his complaint, Carvin argued that his narrow interpretation of the Act would actually confer economic benefits on “many . . . low- or moderate-income individuals,” even though it would strip them of substantial assistance to purchase health insurance.  “While most subsidies benefit recipients,” the complaint contended,

the ACA’s subsidies actually . . . subject . . . many . . . low- or moderate-income individuals to the individual mandate’s requirement to purchase costly, comprehensive health insurance that they otherwise would forgo, [and thus, their availability] prevents them from purchasing cheaper, high-deductible catastrophic coverage . . . .”  This, the complaint explained, is because, absent the premium assistance tax credits and subsidies, his plaintiffs and other similarly situated individuals would have incomes low enough to qualify for the “affordability” exemption from ACA penalties for failing to purchase ACA-compliant insurance. (No penalties can be levied against persons for whom premiums for an ACA-compliant policy equal 8 % or more of income.)

In fact, however, Carvin’s claim, that denying premium assistance to his clients, and “many” other low- and moderate-income people, will actually spare them widespread economic harm, is not only counter-intuitive.  The real figure for the economic “damage” his clients will suffer, if his claim is rejected and they remain eligible for tax credits and subsidies, appears to be zero. 

The arithmetic calculation necessary to quantify plaintiffs’ asserted loss appears toward the end of the Justice Department’s brief. DOJ’s analysis shows that, of Carvin’s four plaintiffs, two in fact qualify for the ACA’s 8 % “unaffordability” exemption, even when the tax credits and subsidies to which they would be entitled are factored in.  Hence, they are off scot-free, and can lawfully ignore the mandate, whether premium assistance is available on the exchange in their state or not.  As for the two remaining Carvin plaintiffs, the Department’s brief shows, that with premium assistance credits and subsidies, they will actually spend less for insurance that meets the ACA’s minimum requirements, than they would on the skimpier “catastrophic” type of policy that the complaint alleges they would prefer. Factoring in applicable subsidies, DOJ calculates, one of the two plaintiffs would spend $353.12 more per month on such a comparatively skimpy “catastrophic” plan, than on a more beneficial ACA-complaint plan, or $4237.44 more per year.  The remaining, fourth, plaintiff would pay $96.82 more per month — $1162.88 more per year – by buying coverage too limited to pass muster under the ACA.  Bottom-line: The Administration ’s ruling that the ACA provides for premium assistance tax credits and subsidies on all exchanges, federal or state causes zero economic harm for each of Carvin’s four plaintiffs. 

In reply to DOJ’s analysis, Carvin did not challenge the Department’s calculations and conclusions.  About the two plaintiffs whom the Department showed remained exempt from the ACA insurance mandate, even after factoring in the premium assistance credits and subsidies to which they were eligible, Carvin’s submission was silent.  Otherwise said, he did not contest the Department’s point – that resolution of their complaint would have no effect on their status vis-à-vis the individual mandate, hence they they actually lacked standing to pursue it.  Regarding his remaining two plaintiffs, Carvin asserted that “They are injured by being compelled to purchase a product that they do not want,” and experience incidental inconvenience – never mind, as DOJ demonstrated, that the unwanted product is less expensive and more beneficial than one they claim to prefer.  So, contrary to the complaint that launched the cases, there is in fact no “financial injury” at stake, let alone for “many” low and moderate income people. 

That could well, as Carvin wrote in his brief – and snapped back at Judge Davis during the oral argument – be enough to satisfy technical prerequisites for conferring standing to sue on his now-down-to-two plaintiffs.  And it may be that Carvin and his allies will at some point manage to get one of these challenges before judges (or justices) who share their animus toward a law that obliges individuals to endure what his brief characterized as having to “go through the administrative hassles of purchasing coverage on the malfunctioning Exchanges.”  But, as Judge Davis pinpointed, this is pretty thin stuff.  Thin, indeed, as a basis for upending an historic law already relied upon by millions for access to health care.  And the judicial overreach would be all the more stark,  justified as it would have to be on a purported interpretation of the ACA already dismissed as “unambiguously” incorrect, by the two veteran district judges, one a Clinton appointee and one a Reagan appointee, who have ruled on its merits so far.



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