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Obama Democrats Lose Their Big Bet on Health Exchanges

A Commentary by Michael Barone

Friday, July 25, 2014

Words mean what they say. That's the basis for the decision of the U.S. Court of Appeals for the D.C. Circuit in Halbig v. Burwell invalidating the Internal Revenue Service regulation approving subsidies for Obamacare consumers in states with federal health insurance exchanges.

The law passed by Congress, Judge Thomas Griffith explained, provided for subsidies in states with state-created exchanges, but not in states with federal exchanges. That's factually correct, and under the Constitution, the government can't spend money not authorized by Congress.

This has not prevented Democrats from calling the decision "judicial activism," which makes as much sense as the claims that the Supreme Court decision overturning the Obamacare contraception mandate cuts off all access to contraception.

"We reach this conclusion," wrote Judge Griffith, "with reluctance." Judge Roger Ferguson, writing for the Fourth Circuit whose King v. Burwell decision upholding the IRS was announced the same day, wrote that those challenging the government "have the better of the statutory construction arguments."

One has a certain sympathy with both judges. They're being asked to overturn a regulation that has paid most of the cost for health insurance for some 4.7 million Americans. But the problem arose not from sloppy legislative draftsmanship.

Under previous court decisions, Congress can't force state governments to administer federal laws. So congressional Democrats, seeking to muscle states into creating their own health insurance exchanges, chose to provide subsidies only for those states. Those opting for the federal exchange would have to explain to voters why they weren't getting subsidies.

This attempt to muscle the states failed. In August 2011, when the IRS issued its regulation, only 10 states had created their own exchanges, and 17 states explicitly refused to do so. Health and Human Services Secretary Kathleen Sebelius kept extending deadlines to force states to create their own exchanges.

Congressional Democrats and the Obama administration bet that they could force the states to do their will. When they lost their bet, the administration ignored the Constitution and ordered the spending of monies that Congress never authorized.

This was lawless behavior, and reckless as well. It promised to individuals acting in reliance on government regulations money that was subject to being clawed back if a court applied the statute as written.

The alternative was, to be sure, politically unpalatable. The administration could have gone back to Congress and asked it to authorize subsidies in states with federal exchanges. House Republicans, now in the majority, would have demanded other changes in the law.

So today the strongest argument for upholding the administration's reckless regulation is that people might be hurt if the law is enforced as written. White House Press Secretary Josh Earnest says Congress meant to give money to lots of people -- so who cares what the law actually says?

The irony here is that the Obama Democrats, in passing Obamacare in its present form, and in betting that it could pressure the states into doing their will, have discredited big government generally and have weakened the federal government's power to commandeer and control the states.

They expected Obamacare to be popular. Give people what Mitt Romney called "free stuff," and they'll be grateful.

It hasn't turned out that way. Most Americans have bridled at Obamacare's centralized command-and-control approach and have instinctively preferred more market-based or locally regulated alternatives.

The fiasco of the healthcare.gov rollout and the administration's multiple suspensions of various provisions of the law have sapped confidence in big government's competence.

On the legal front, it has generally escaped notice that in its NFIB v. Sebelius decision upholding Obamacare, the Supreme Court also invalidated its Medicaid provisions -- and by a 7-2 vote that is unlikely to be overturned by one or two new Democratic-appointed justices.

Obamacare provided that states must accept new Medicaid provisions requiring higher spending or lose all their federal Medicaid money altogether. Not valid, said the justices. Congress can't take command of state governments by threatening to cut them off if they don't spend more.

Few legal experts thought this challenge to the statute would prevail. But it did, and it provides a basis for discouraging or challenging any future massive expansion of federal programs that require, as most do, matching spending by the states.

The Obama Democrats have succeeded in expanding government, temporarily. But they've also discredited it and provided a basis for limiting it in the future.

Michael Barone, senior political analyst at the Washington Examiner, (www.washingtonexaminer.com), where this article first appeared, is a resident fellow at the American Enterprise Institute, a Fox News Channel contributor and a co-author of The Almanac of American Politics. To find out more about Michael Barone, and read features by other Creators writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

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