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The case that Idaho’s brazen anti-Obamacare plan isn’t illegal after all

Dylan Scott covers health care for Vox. He has reported on health policy for more than 10 years, writing for Governing magazine, Talking Points Memo and STAT before joining Vox in 2017.

If you want the full breakdown of Idaho’s audacious plan to unravel Obamacare within its borders, check out the piece we published this morning. The gist is that the state will permit health insurance plans that do not comply with some of the ACA’s core insurance protections.

For now, the Trump administration isn’t showing its cards, even though policy experts say the Health and Human Services Department already has enough grounds to intervene and tell Blue Cross of Idaho, the first insurer to take up Idaho on its offer, to cease and desist.

“I just don’t believe in premature opinions on complex topics,” HHS Secretary Alex Azar told reporters yesterday. “At the right time, I’m sure we would have views.”

Idaho’s brashness and the Trump administration’s ambivalence are setting up maybe the most interesting health care legal quandary since King v. Burwell, the Supreme Court case that alleged Obamacare’s premium subsidies weren’t allowed in states that had marketplaces run by the federal government. (In fact, an attorney following the Idaho situation sent me a King v. Burwell brief as reading material.)

Because unless the Trump administration decides to intervene, the next stop for Idaho and Blue Cross is probably the courts.

So I want to set aside the policy for today and look at the law. On its face, Idaho’s plan seems patently illegal. But somebody actually made the case to me today — and I think it’s worth taking seriously — that it’s not. We’ll get back to that in a minute.

I ran through University of Michigan professor Nicholas Bagley’s thoughts in the piece linked above, but let me summarize them again in brief. His overall take was: “I think counting on the courts is a big mistake.”

Here’s why, per Bagley:

  • Idaho is not technically doing anything illegal by permitting non-Obamacare insurance. “The federal government can’t commandeer state regulators to enforce federal law.”
  • Blue Cross of Idaho, which is bound by the ACA’s rules, would be violating federal law. But its likely calculus? “Its claim cannot be what we’re doing is legal. The claim is we don’t think we’re gonna get caught.”
  • The Trump administration has pretty broad discretion about which federal laws it wants to enforce. It’s like marijuana legalization under the Obama administration: The feds can decide certain violations are not worth spending resources to stop. “The basic structure of the problem is identical.”
  • For all sorts of legal reasons about tort and breach of contract, too wonky even for this newsletter, it could be hard to find a plaintiff who has standing to sue over Idaho’s plan. Without a plaintiff, you won’t be able to get a hearing in court to try to stop Idaho’s plan. “It’s not a trivial problem to find standing.”
  • Even if you can get to court, federal judges are usually deferential to federal agencies on the decisions they make about how best to spend their resources. It’s marijuana legalization again. “They won’t second-guess that determination. If [HHS] just doesn’t act, a federal lawsuit to challenge will not get off the ground.”

For all those reasons, litigation to stop Idaho from allowing non-Obamacare plans has some substantial hurdles to clear.

But there is actually an argument that Idaho and the Trump administration (not only by allowing Idaho’s plan to go forward, but in its proposal to expand short-term insurance) are acting within the law to allow these non-ACA plans onto the market.

I’m not a lawyer, of course. But when an attorney tracking the Idaho situation (who asked to remain nameless) laid out their case to me this afternoon, I found it thought-provoking. If it held up, it would certainly open the door to a more expansive view of what is actually permissible under the ACA.

This was the argument, as I understood it:

  • The courts have already taken a position in previous cases, including King v. Burwell, that Obamacare should be interpreted as a whole, based on its policy goals, rather than strictly on individual portions of its text. “The Supreme Court has indicated in King v. Burwell that the ACA is one of perhaps a unique set of statutes where the law should be interpreted and portions should be construed in the context of various public policy considerations.”
  • The repeal of the individual mandate in the tax bill last year might force us to reexamine those policy considerations. With the mandate, the ACA could be interpreted first and foremost as the transfer of wealth from younger and healthy people to older and sicker people. Without it, its primary policy goals could be defined as expanding insurance coverage and reducing uncompensated care.
  • Through that lens, with the mandate gone, expanding non-ACA plans might actually be interpreted as furthering the goals of the law. For young people who find ACA coverage unaffordable: “Do you want them to drop out of the insurance pool completely, or do you want to keep them insured even if they are being insured with a product that has an annual limit?”
  • There is already language in the ACA allowing temporary insurance plans that don’t comply with its core insurance regulations. So maybe, based on the above factors, the law can be interpreted more broadly to allow the kind of proposals that Idaho and the Trump administration are pursuing.

”There are people who might say we can just interpret this language about temporary insurance coverage so that it meets what our current goals are,” the attorney said. “Keeping a larger number of people insured is one of the principal policy goals that we are going to use as a star to steer by.”

Like I said, I’m no statutory expert. But I found this argument rather compelling — and it’s worth keeping in mind as Idaho’s proposal and the Trump administration’s plans continue to move forward.

This story appears in VoxCare, a newsletter from Vox on the latest twists and turns in America’s health care debate. Sign up to get VoxCare in your inbox along with more health care stats and news.