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Gov. Scott attacks The Patient Protection and Affordable Care Act (ACA) “Obamacare”!


An article appeared in the National Review (online) on July 4, 2012. I will summarize the article:

The media has given little to no attention to the Supreme Court’s second ruling regarding the ACA, so-called “Obamacare” in a 7-2 decision striking down a massive and very costly expansion of Medicaid (which is administered by the states). Barely a day after the decision our governor Rick Scott announced that Florida will not expand Medicaid eligibility to 133% of the federal poverty level (as set forth in the ACA). Earlier, Gov. Scott had declined to establish state insurance exchanges, as allowed for (but not required) in the ACA. The left is going absolutely apoplectic over this one two punch to the ACA in Florida, as I will explain.

The savings on the Medicaid side over about ten years to Florida taxpayers who will not have to foot the bill for the Medicaid expansion after 2017 (when the federal government begins the phase down of the additional funds provided from 2014-2017) will be approximately twenty billion dollars. The ACA provides that most of those who would have been eligible for Medicaid will become eligible for subsidies through the ACA exchanges paid in full by the federal government. But, as Rod Serling stated so uniquely in an episode of The Twilight Zone that you might recall; “Ahhh, there’s the rub!”. If Florida refuses to set up the insurance exchange (which Gov. Scott has done) the ACA gives the federal government the authority to step in and set up the exchange itself. Congress has not appropriated any funds for this purpose and, in this political climate, seems very unlikely to do so any time soon!

Now to “the rub”. Those subsidies under the ACA cannot be offered by the federal government, only by the state run exchanges! In my view, the ACA is not only bad law (with a few good provisions which can be resurrected after the current law is repealed) and terrible public policy for the middle class and small businesses but is so poorly drafted as to contain a huge loophole that may render the law unworkable. We can only hope! Here’s an example of how this loophole could work. The subsidy triggers the penalty (tax?) under the ACA for employers with fifty or more employees who fail to provide workers with insurance but only if at least one employee qualifies for subsidies under the exchange. Therefore, if subsidies can only be provided through state authorized exchanges a state could defeat the employer mandate just by refusing to establish an exchange! Apparently, the towering intellects who drafted this legislation missed this! In any case, the Obama administration and our friends at the IRS claim they have the unilateral right to rewrite the ACA to close this loophole (and others). I don’t claim to be a legal genius like the Obama team but I do have a law degree and practiced law for many years. This claim of a unilateral rewrite is certainly open to legal challenge. Maybe the Supreme Court will get it right this time!

The bottom line is that while the media and the political class pontificate and spin the Court’s decision about whether or not the individual mandate is a tax, etc. the real action (as has been the trend for a very long time) is taking place with governors and state legislators in the fight for fiscal sanity against the ACA, better known as “Obamacare”.

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