I’m fairly confident this partial decision by the D.C. Circuit on Halbig v. Burwell will not stand. It is obviously absurd from a legal perspective, which is why other courts have ruled against the idea. But if by some miracle the opponents of the Affordable Care Act do ultimately prevail there is a real question of how much damage it could really do.
What is important to remember is that the case won’t even change anything for at least a year. The case will likely first get an en banc review by the full D.C. Court. That will take several months. Then the case will likely be appealed to the Supreme Court. If the Supreme Court even decides to take the case, it will be months before they hear oral arguments on it and several more months before they actually reach a verdict. Under the worst case scenario the Supreme Court won’t issue a ruling taking tax credits away from people in states with federally run exchanges well into 2015.
By that time the exchange tax credits will have been going to millions of people across the country for almost two years. People will have come to depend on them and eliminating these tax credits would be hugely disruptive. It would cost millions of people their coverage, savings, and/or jobs. It will not just be an immediate huge hit to people in the individual market, but also to hospitals, doctors, pharmacies and other businesses in the health care industry.
At the same time, fixing the issue would be extremely easy. Congress could pass a small correction or all the state governments could just just say they officially created a “state exchange” but contracting Healthcare.gov to do everything. These millions of people who would be directly and significantly hurt by the ruling should be able to create enough political pressure to force through one of these fixes.
If, after two years in operation most of the people who are supposed to benefit from the exchanges aren’t willing to fight over them, then the law fundamentally has a problem that goes way beyond this lawsuit. In the long run the program’s existence depends on the users wanting it to stay and being willing to change their votes based on the outcome.
If the law isn’t at least winning over its base of users by 2015, eventually it will be crippled either in one big move or in a thousand cuts. No government program that cost tens of billions a year, like the exchange tax credits, will survive long without a real base of support.