By Thomas P. Miller

On this coming Monday, June 6, all comments are due for filing on
the latest, desperate effort by the Biden administration to “fix” through
revisionist rulemaking what was broken long ago by Congress in the 2010
Affordable Care Act (ACA). The so-called Family Glitch prevents eligibility for
ACA insurance premium tax credits for the dependents of employees that already are
eligible for offers of affordable “minimum essential coverage” at the workplace.
It has remained a sore point for proponents of expanded ACA insurance for
almost a decade. The latest efforts at a regulatory re-stitch in time remain an
illegal stretch that reveals far more about the sad administrative law history
and imbalance of powers for most things ACA.

The short and simple background story is that, once upon a time in
congressional lawmaking, Congress barely dragged an unpopular health care bill
across the finish line in March 2010. It was full of sketchy compromises,
incompletely (or incompetently) drafted provisions, and misfit political toys, along
with a TBD approach to complex implementation details. A large part of what
pushed this overloaded legislative train forward was the cosmetic claim that
the entire package was paid for under the budgetary scoring magic of the time.
One of those necessary components involved limiting the potential erosion of
employer-sponsored insurance enrollment and additional claims by workers’ dependents
on taxpayer-subsidized coverage in the ACA exchange plans to come in 2014 and
beyond.

Even after Obama administration attorneys and Internal Revenue Service officials admitted in 2013 that the Glitch actually was intentional policy enacted by Congress, a coalition of ACA expansion advocates and revenue-hungry health industry interest groups still refused to take “No” for an answer. When a number of subsequent efforts in Congress to change the law itself fell short of necessary majorities, these health care gladiators vowed, “Tis but a scratch and only a flesh wound” on their march to bigger, if not better, government.

In no doubt about what is more necessary, if not proper, and what is equitable, if not efficient, the modus operandi of the new rule’s legal advocates/apologists is to claim “ambiguity” elsewhere that would facilitate some executive branch freelancing. Hence, a new proposed rule was released in early April to reverse the clear state of the law and its implementation rules since at least 2013, if not earlier.

Of course, there is rich legal interpretation irony here, given the gymnastic repositioning of several previous readers of a different ACA statutory provisions in the King v. Burwell line of litigation, concerning the statutory meaning of “established by the State” for determining whether federal-run ACA insurance exchanges were eligible for premium tax credits. The only working consistency seems to be that statutory ambiguity always giveth, but it never taketh, taxpayer funding for the ACA.

Not that I should complain. Jumping down into the ACA regulatory
and litigation rabbit hole has kept my heart rate up for more than a decade. I
always thank the Obama administration for making my health law work necessary,
if not always successful! One might Say
that supply of bad law can create its own demand. But I know a second-rate
legal argument involving the ACA when I see one, having launched a few myself!

Accordingly, with cleaner hands in this case, I have joined in signing an excellent regulatory comment on the Family Glitch, drafted and orchestrated brilliantly by longtime colleague Doug Badger of the Heritage Foundation and Galen Institute. It rebuts a host of weak arguments for stretching perceptions of statutory ambiguity so far that they snap. There are other policy-related reasons to be skeptical of a Family Glitch fix (target efficiency, private coverage crowd out, disruption of integrated family coverage), but the unrebuttable legal-side clincher comes in 26 USC § 36B(c)(2)(C)(i)(II). It incorporates the original and unchanged statutory provision in the ACA text concerning a special rule for employer-sponsored minimum essential coverage:

Coverage must be affordable Except as provided in clause (iii), an employee shall not be treated as eligible for minimum essential coverage if such coverage—(I) consists of an eligible employer-sponsored plan (as defined in section 5000A(f)(2) ), and (II) the employee’s required contribution (within the meaning of section 5000A(e)(1)(B)) with respect to the plan exceeds 9.5 percent of the applicable taxpayer’s household income. This clause shall also apply to an individual who is eligible to enroll in the plan by reason of a relationship the individual bears to the employee. [Emphasis added]

In other words, the out-of-pocket premium cost to an employee is what controls for this affordability test, even if her family members face even higher costs, relative to the family’s income, for their share of the employer plan’s family coverage offered to them. Game, set, match? It’s never over until Part II comes next.

The post The Family Glitch, Part I: Will a Reconstructive Gift Keep on Giving? appeared first on American Enterprise Institute – AEI.