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One Guy Balks at $21/Year Insurance, May Cause Millions to Pay More

We now present Halbig v. Burwell, the court challenge by which two D.C. Court of Appeals judges would destroy the Affordable Care Act, thanks to one selfish dolt.

First, let's understand the grounds for the ruling. The plaintiffs don't like the ACA's health insurance mandate. They don't want to have to buy health insurance. They also don't want to pay the ACA penalty for not buying insurance. They face this penalty because, thanks to the tax subsidies offered by the ACA, they could buy health insurance on the ACA exchange for less than 8% of their income (that's the standard for "affordability" used by the ACA to determine whom to exempt from the insurance mandate).

But wait: if those subsidies weren't available, the cost of those cheapest qualifying policies would be more than 8% of their income. The ACA doesn't penalize people who can't afford insurance. So get rid of the subsidy, make health insurance unaffordable, and the plaintiffs get out of the penalty and the health insurance mandate!

So the plaintiffs get the D.C. Court of Appeals to rule that the language in the ACA authorizes the federal health insurance premium subsidy only in states that set up their own health insurance exchanges, leaving folks in 36 states (like South Dakota) forced onto the federal exchange by circumstance or Republican governors unable to access the premium subsidy that Congress intended via the ACA to make available to every American.

This thrilling political adventure is brought to you by one West Virginia man who would rather flip the bird at Uncle Sam and cause millions of his fellow Americans to pay hundreds, perhaps thousands of dollars more on their health insurance than pay $21 a year for health insurance for himself. From today's ruling:

The district court determined that at least one of the appellants, David Klemencic, has standing. Klemencic resides in West Virginia, a state that did not establish its own Exchange, and expects to earn approximately $20,000 this year.1 He avers that he does not wish to purchase health insurance and that, but for federal credits, he would be exempt from the individual mandate because the unsubsidized cost of coverage would exceed eight percent of his income. The availability of credits on West Virginia’s federal Exchange therefore confronts Klemencic with a choice he’d rather avoid: purchase health insurance at a subsidized cost of less than $21 per year or pay a somewhat greater tax penalty [Judge Thomas B. Griffith, Halbig v. Burwell, D.C. Court of Appeals, 2014.07.22].

For the record: if there's a health insurance policy sitting on your plate for $21 a year, and you don't want it, I'll buy it. Heck, I'll buy it and another one for you. I can find twenty people in ten minutes who would each chip in a buck to buy you your $21 a year policy just so you'll shut up and let everyone else enjoy affordable health insurance.

Mr. Klemencic's crass selfishness did not become law of the land today. Down the road in Richmond, the federal 4th Circuit Court, hearing the similar King v. Burwell lawsuit, ruled the opposite way. The 4th Circuit doesn't dunk the ball for the ACA, saying that the federal government offers a slightly better but not conclusive argument of legislative intent. Faced with plausible alternative interpretations, the court chooses not to usurp the IRS's regulatory authority to interpret legislative intent by applying the premium subsidy to federal exchange customers.

Read that again, Republican readers: the IRS is using its discretion to lower more Americans' taxes, and the 4th Circuit is eschewing judicial activism. Who's your friend?

The two D.C. Court of Appeals judges who supported Klemencic's argument are Republican appointees; the dissenting judge is a Democratic appointee. The three 4th Circuit judges who ruled in favor of the ACA and IRS are all Democratic appointees. Whatever the proper interpretation of the law (and heck, even mine may be colored by partisanship!), Black Hills big-thinker Stan Gibilisco wishes the courts could assure us they are reading the law, not the political scorecards:

Much to Gibilisco's chagrin, the press is playing that baseball, counting seven Democratic heads and four Republican on the full D.C. Court of Appeals, from which the Obama Department of Justice has already promised to request an en banc review of Halbig.

Meanwhile, over four million taxpayers who purchased insurance on the federal exchange and qualified for premium subsidies will live in uncertainty as to whether their insurer or the IRS will take that money back. But if those taxpayers lose, they can at least be happy for Citizen Klemencic's pyrrhic $21 savings.


  1. Tim 2014.07.22

    If these people don't want to pay for insurance then I say let them bail out, however, when they show up at the ER with a problem then they will need cash up front or be turned away. Stop screwing with them, if they don't have insurance then they need cash, and not a stinking down payment, they must pay the full bill, up front.

  2. mike from iowa 2014.07.22

    Be willing to bet there is a rw group behind the scenes advising this guy. I'd blame Mellon-Scaife if I wasn't sure the old SOB Clinton hater had died recently. He was the money behind the made-up rumours about Bill's sexual peccadilloes

  3. Jerry 2014.07.22

    One court says nyet and the other says no problem. Much ado over nothing. The law stands and this will keep going. There is now to much at stake for anything else to happen. I think it is doubtful the Supreme Court will even hear this again. The real solution would be Medicare for all. By this time next year, Vermont will have theirs in practice. Damn those independents are good.

  4. Deb Geelsdottir 2014.07.22

    Tom Goldstein has written an opinion piece in the Washington Post saying that he expects little change in Obamacare. Here's information about Mr. Epstein:

    "Tom Goldstein is an appellate advocate, best known as one of the nation’s most experienced Supreme Court practitioners. He is also the co-founder and publisher of SCOTUSblog."

    Read this to find out why he feels that way:

  5. Jerry 2014.07.22

    These judges are not elected Stan. They are appointed by republicans or by democrats. To think that they are not partisan is a stretch. The judges have been partisan since the idea of judges first came into being. How do you think the Hobby Lobby deal was done? The court was split down party lines. Your outrage on this is kind of like finding that the sun comes up in the east and now it is good to know that you are clear on how the game is run and why the rules these two made mean nothing. The ACA ship has sailed, proudly waving the Democratic flag for the 20 million newly covered American citizens in healthcare.

  6. Roger Cornelius 2014.07.22

    Scoop Power over on DWC, while rejoicing the decision of the D.C. Court of Appeals fully neglected to report the decision of the 4th Circuit.
    Powers and Wadhams are calling the ACA Weiland/Obamcare, even though Weiland was not in the Senate in 2009 when the ACA was approved.
    While Wadhams/Powers play politics with the health insurance of millions of America, they are neglecting the fact that those at risk are voters.

  7. Stan Gibilisco 2014.07.23


    Of course the judges are partisan. They are human beings. I only dream away like John Lennon in "Imagine."

    For all intents and porpoises, no judiciary branch truly exists in the United States of Advertising.

    Meanwhile, I'll pack my bags and go to Vermont before my bowels burst and I have to decide which lawyer to call for medical treatment.

  8. mike from iowa 2014.07.23

    The probable outcome of this is the activist.wingnut branch of the Scotus dusts off the 14th amendment "seperate but equal" Bush v Gore gem and reiterate that not appointing dumbass dubya Potus would cause Bush irreperable harm. Therefore, shouting fire in a crowded theater is not bragging if one backs it up with a large body count and Obama was rilly born in Benghazi. And,lest I forget,this a one time decision,not to be considered precedent.

  9. Steve Sibson 2014.07.23

    "they are neglecting the fact that those at risk are voters"

    And coveters.

  10. barry freed 2014.07.23

    Of course there is big money behind him, how else does someone grossing $20K per year afford to sue anybody?
    The families of at least 3 dozen South Dakotans who died needlessly since the Law took effect have standing to sue DD and SD for wrongful death, but how many of them have the money?
    There is not one lawyer with a soul in this State.

  11. larry kurtz 2014.07.23

    DD is coveting by making South Dakota a perpetual disaster area and moocher state: damned Lutherans.

  12. caheidelberger Post author | 2014.07.23

    Roger, notice that Powers didn't really cover the story; he just reprinted the Republican press release celebrating DC court but ignoring the 4th Circuit. Typical laziness on Pat's part.

  13. caheidelberger Post author | 2014.07.23

    Barry, I'd love to see someone find a way to make such a wrongful death lawsuit happen. That would be much more riveting than this plaintiff's effort to save $21 and leave himself uninsured... meaning that if he gets really sick, we will end up paying his bill for him.

  14. Lynn 2014.07.23

    Did Rounds accept millions of dollars for the implementation of state exchanges and not set them up? If so, what happened to the money?

  15. Liberty Dick 2014.07.23

    The income tax started off small too... #justsayin'

  16. bearcreekbat 2014.07.23

    It will be interesting to learn who convinced the plaintiff to participate in the lawsuit and who is actually financing the litigation.

    Also I did not see AG Jackley's name on the list of state attorney generals filing amicus briefs. I wonder why he didn't defend the IRS rule knowing that South Dakota did not have a state exchange, and that every South Dakotan who purchased insurance through the federal exchange was at risk of losing the promised subsidy? I thought our AG was supposed to try to protect our state residents?

    In any event, perhaps the up side is that AG Jackley did not join with the AG's from 8 other states to argue that people buying insurance off the federal exchange all must get screwed. Perhaps we can be proud that our AG did nothing to advance this lawsuit, even though he did nothing to protect our state's people.

  17. jerry 2014.07.23

    The guy probably is banking on being a paid consultant on fake news. It is clear that he did not need health insurance at present. What would be really cool is if suddenly he did. Now that would be justice, say a heart attack or car accident would maybe help to make him aware of what an asshat he is.

    The truth be known, Jackley knows what butters his bread and he knows that the powerful insurance companies (think Mike Rounds) are making boat loads of moolah off this insurance racket. This is the teat that makes them ice cream, why would they want to kill it? Jackley knows this as well and is dependent on making sure that boat does not get a leak.

  18. Roger Cornelius 2014.07.23

    Shut up Sibson, the adults are talking

  19. mike from iowa 2014.07.23

    A newborn that wants to be fed or his/her nappy changed is a coveter,too?

  20. MJL 2014.07.23

    Stan, if the judges were following precedent and reading the law, they would have ignored this ruling. Many laws are written with confusing text. The agency designed to enforce the law is typically given the right to clarify any confusion if Congress doesn't. If you read the dissent and the ruling of all the other courts, you would see that the two judges that ruled for the plaintiffs are the ones playing politics.

  21. Anne Beal 2014.07.24

    The ACA specifically restricted the subsidies to the state-run exchanges in order to pressure the states into setting up the exchanges. BUT, since it is the subsidies which trigger the employer penalty, any state which didn't set up the exchange effectively exempted all the employers within the state from that penalty. And since the subsidies would be based on family size and income, employers faced with that penalty would be loathe to hire people with large families. So not having the exchange helped the employers as well as single moms with 3+ kids who would otherwise be deemed unemployable.
    Add to that the problems getting state run exchanges to work , the cost to the states of trying to fix them, AND the apparent kiting of payments by the exchanges, resulting in people who got sick having their claims denied because the insurance companies aren't getting the money from the exchanges, and it turns out that not having a state-run exchange is a good thing.

  22. jerry 2014.07.24

    Anne Beal, you are not correct. Where specifically does it say what you are saying? What part of the ACA dealing with subsidies, even mentions an employer? You will not find that because there is no correlation between subsidies and employers or employees for that matter.
    Your fibs are not even amazing as I have read so many whoppers from you, nothing surprises. Facts are not your strong points so stop spending so much time with Fox.

  23. caheidelberger Post author | 2014.07.25

    Anne, ultimately this interpretation will fail because it makes no sense. It ignores the intent of the law, which even Chief Justice Roberts acknowledged in 2012 was to enact nationwide reform. Plus, if your interpretation had any validity, that mechanism for pressuring the states makes no sense. If Congress wants to pressure the states, it doesn't take money away from individual taxpayers or create a system which, by your rationale, actually benefits the states for doing the opposite of what Congress wants. If Congress wants to pressure states to do something it can't mandate, as with the drinking age, it threatens to withhold funding from the state governments themselves.

    And remember, Anne, you're rooting for an interpretation in which an activist judiciary overrules the proper regulatory authority of the executive branch and raises taxes.

  24. Anne Beal 2014.07.25

    The intent of the law was to pressure the states into setting up their own exchanges. Do you have a problem comprehending that idea?
    I got my understanding of the way the ACA was written from Michael Cannon of the CATO institute. Every talking-head lawyer on TV has been saying the same thing. That's what's written into the ACA. it is now considered a big goof. Congress should re-write it, but that's not going to happen. And it IS the subsidies which trigger the employer's penalty, by notifying the IRS that the employee isn't making enough money.
    Now, about subsidies and employers. While the employer mandate has been put on hold by Executive Order until after the 2014 elections, it will require employers of more than 50 people to pay 65% of the health insurance premiums for their employees. Employees who find their 35% exceeds 9.5% of their income will be eligible for subsidies. If any one of the employees qualifies for a subsidy, the law requires the employer to pay a $2000 fine for EVERY employee he has, not just the one who qualified.
    So lets do the math; according to NBC news, the average family plan costs $16,000/year. the employer has to pay $10,400 of that, the employee has to pay $5,600. If $5,600 exceeds 9.5% of the employee's household income, that employee is eligible for a subsidy. So the employee would have to earn $58,948/year, or have another earner in the family contributing to the household income.
    Enter the single mother with 3+ kids. She's the only earner in her household. If she makes less than 400% of the FPL, or $95,400/year, she qualifies for Medicaid. You are the prospective employer, looking over her job application. And you realize this nice person with 3+ kids who worked hard to get her GED might be a very good employee, but she's not worth $95,400/year. She's not even worth $58,948/year. And if you hire her for the $20,000 or so that she's worth, she'll qualify for a subsidy, which will trigger the employer penalty on all of your other 51 employees, and she's going to cost you an extra $102,000 every year. Your other option, to cover the $5,600 year difference for her, so that her premium is covered 100%, won't be well received by your other employees when they find out about it. You will end up having to pay that $5,600 for ALL of them, to the tune of $285,600/year.
    So you don't hire her. Nobody will. the people who need jobs the most will not find them.

  25. jerry 2014.07.25

    Anne Beal, you cannot base reality on what a right wing agency like CATO puts out. Talking heads are just that.None of what they have said is true even remotely. Read the law and you will see that.

  26. Roger Cornelius 2014.07.25

    I can't quite recall where, but it seems that I have read Anne's two comments somewhere before

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