Endless GOP Sabotage

It's not like sabotaging the Affordable Care Act is new or anything, but our old friends at ALEC are pushing a red state boilerplate bill designed to remove state operating licenses for any insurance company that complies with federal exchange subsidies.

The ALEC bill works like this. Under the Affordable Care Act, insurers receive subsidies to help offset costs of insuring more people at lower rates. Separately, businesses with more than 50 employees face a penalty if they don't offer health insurance. 

According to Cannon: "if an employer doesn’t purchase a government-prescribed level of health benefits, some of its workers may become eligible to purchase subsidized coverage through a health insurance 'exchange.' When the IRS issues the subsidy to an insurance company on behalf of one of those workers, that payment triggers penalties against the employer." 

Therefore, Cannon, claims, the penalty is triggered only if an insurance company accepts federal subsidies. The solution? Prohibit insurance companies in the state from accepting subsidies, by threatening to suspend their license. 

The problem is that the federal Affordable Care Act pretty clearly preempts states from implementing such a prohibition. 

Cannon's argument to the contrary is pretty weak. He acknowledges that the Affordable Care Act preempts state laws that “prevent the application of the provisions of this title,” but argues that Congress envisioned that states would retain their authority to set the terms of those licenses, because only state-licensed insurers can offer coverage on the exchanges. Therefore, Cannon argues, that because Congress made reference to state licensing in the Affordable Care Act, states therefore have free rein to enact restrictions on licenses, even if the exercise of that power would “prevent the application of the provisions of this title.”

It is a creative legal argument, but a pretty thin reed for states to rely upon when setting up a "nuclear option."

The plan of course is twofold:  to force a Supreme Court challenge on the constitutionality of the subsidies for policies bought on the federal exchanges (as well as the provision that stops states from penalizing insurers for complying with the ACA), and to get a friendly enough panel of federal judges to stay the payment of subsidies to states that pass this law while the case lingers in the courts.

If they can drag this out for years, the damage done to families looking for affordable insurance could be massive.  Imagine low-income families getting no subsidies at all to help pay for a plan when they would otherwise qualify, and you begin to see the political and financial carnage that would follow.

Even if the political damage would be mitigated by Republicans getting stuck with the blame, the damage to the federal exchange plan prices in a scenario like this would be pretty huge.  It would effectively shut down Obamacare in those states if allowed to continue, and that's the point.

Expect these laws to start ending up on the books soon as it becomes clear the law is working for people.