The Obama administration found itself back in federal court last week, defending two lawsuits involving the Affordable Care Act. The U.S. Supreme Court heard oral arguments in the most closely watched case of this year’s term, Sebelius v. Hobby Lobby, and will decide in June whether a for-profit corporation may deny its employees health plan contraception benefits based on its owner’s religious beliefs. On the same day, the U.S. Court of Appeals heard arguments in Halbig v. Sebelius, which could jeopardize the subsidies received by anyone purchasing health insurance on the federal exchange. Both the issues and their timing present headaches for the administration, which spent the week touting the fact that more than seven million Americans have signed up for health insurance on the federal and state exchanges, despite the news that on the latest “last day” for individuals to sign up for Obamacare, the website went down again.
Halbig could drive a stake through a critical element of Obamacare. Of those seven million-plus people who signed up, at least half did so on the federal exchange, which serves 36 of the 50 states, and with more than 80 percent of those signing up qualifying for subsidies that reduce their premiums. If the legal challenge in this case were to prevail, all those subsidies would be eliminated. Most of these individuals would then be unable to pay for the insurance, and accordingly at least half of the seven million-plus would again be uninsured. Not a healthy result.
The sole issue in Halbig is rather straightforward. The challengers say the plain language of the Affordable Care Act makes subsidies available only through marketplaces — that is, exchanges — established by “states.” To overcome this specific language in the act, the IRS issued a rule that allows subsidies, in the form of tax credits, for people who buy insurance in the federal exchange. The challengers claim the IRS exceeded its authority when it issued this rule. The Obama administration argues that Congress intended for subsidies to be available regardless of whether people bought the insurance on a federal or state exchange, so it’s only implementing Congressional intent.
One of the three judges hearing this case, Harry T. Edwards, rightfully noted that any other interpretation than the government’s would “gut the statute.” But Judge Thomas Griffith asked this question:
If we know a clear purpose of Congress and yet they don’t legislate clearly enough to achieve that purpose, is it our job to fix the problem?
One can never predict the outcome of a case from the oral argument, but from reading reports of the Court’s questions it seems to me the President has plenty to worry about with this one. He has delayed, extended and waived many of the Obamacare provisions until at least after the 2014 midterm elections, but it’s hard to see how he could fix this problem if the court rules against the administration. Congress could repair the damage in a heartbeat, but don’t hold your breath for that to happen.
The Hobby Lobby case, on its face, concerns the religious freedom of business owners and their employees and how far the federal government can go in forcing a business owner to pay for medical care he or she objects to on religious grounds. Pretty serious stuff on its own, but legal analysts say the ultimate decision and the language of the majority opinion could have ramifications far beyond the confines of the case.
Hobby Lobby is less about Obamacare and more about religious liberty. Several briefs filed by proponents of the government’s position say that a successful outcome by Hobby Lobby could also turn out to be a serious setback for gay rights, could imperil minimum wage and overtime laws, Social Security taxes, vaccination requirements, blood transfusions, immunizations and psychiatric care. Much of this enunciation of horrors is more a rallying of troops than any realistic concern about the possible outcome of a broad based Supreme Court opinion. An opinion that opens the floodgates of claims that taxes, minimum wages laws and sexual orientation discrimination laws can be avoided on religious grounds is highly unlikely. The Roberts Court is not known for far-reaching and earth-shaking social change. The reporting on the oral argument and the justices’ questioning also indicate a divided court looking for a narrow result based on compromise and judicial restraint. People may disagree with the outcome, but a broad sweeping opinion it will not be.
But you should worry about one of the broader implications that could result from this case. I do fear that any decision in this case is likely to include a further expansion of the legal concept that a corporation is entitled to the same rights and protections as are guaranteed to individuals by our Bill of Rights. This concept was brought to the nation’s attention in Citizens United v. Federal Election Commission, the campaign finance decision that gives free speech rights to corporations and allows them to spend millions of dollars to influence elections. At a minimum, The Hobby Lobby is likely to expand this concept and grant for-profit corporations protection under the Religious Freedom Restoration Act of 1993. The ultimate decision could go much, much further.
Whether this is a good thing or not is a matter of your personal beliefs and conscience. I still find it hard to believe that a corporation can have religious beliefs, period. The owners may have profound religious beliefs. But a corporate entity that sells glue guns and plastic flowers having a soul? Come on.
Think about it. Both for-profit and not-for-profit corporations continue to seek constitutional rights ordinarily afforded only to individuals, such as religious freedom and freedom of speech. If our courts decide to allow corporations to play a greater role in our political system by making unlimited political contributions and hiring armies of lobbyists, should we not ask why they are taxed differently? If Corporate America wants the same protections, shouldn’t they pay the same tax price as individuals? That would mean no more subsidies, no more off-shore tax avoidance schemes, no more depletion allowances, no more rapid depreciation of assets. For non-profit corporations, it would mean no more accumulation of assets tax-free, no more tax-free earnings for their endowments. For you, it might mean better schools, better roads and bridges, better healthcare, maybe even fewer tax dollars sent to Uncle Sam. If corporations want the same rights as individual citizens, they should accept the same responsibilities and tax brackets. What’s good for the goose should be good for the gander!