In order to bring suit against someone in court, the plaintiff has to show that they have ‘standing’, which means that they have suffered a fairly direct injury of some sort that the court can redress. In response to my post on the cases bought against Obamacare because of its use of federal subsidies in the form of tax credits to make health insurance affordable to low income people, reader Mark Dowd posed the good question of how the people who were suing could have standing to do so. How can getting money from the government to purchase health insurance be considered to cause an injury?
The issue of standing is one of the first to be adjudicated in most legal cases and was done so in the Washington DC case of Halbig v. Sebelius and the Virginia case of King v. Sebelius. In the latter, US District Judge James R. Spencer spelled out what was needed to establish standing:
To establish Article III standing, it must be shown: (1) that the plaintiff suffered the invasion of a legally protected interest; (2) that there is a fairly traceable causal connection between the injury alleged and the conduct challenged; and (3) that there is a reasonable likelihood that the injury alleged could be redressed by a favorable decision from the court. [p.7]
Here is where things get interesting. According to the Affordable Care Act, everyone is required to purchase health insurance (the so-called individual mandate) because that is how insurance works, by spreading risk around. If you do not do so, you incur a penalty of 1% of your annual income or $95, whichever is higher. But if your income is so low that the cost of your insurance exceeds 8% of your yearly income, then you are exempt from the mandate and penalty.
When the ACA was passed by Congress, such low-income people were to be covered by the associated Medicare expansion program that states were obliged to adopt. But when the US Supreme Court ruled two years ago that the ACA was constitutional, they also said that individual states had the option to refuse to adopt the Medicare expansion, and what happened was that many Republican-dominated states did just that because of ideological objections of the ACA, even if it condemned millions of low-income people in their states to not have health insurance, an unconscionably cruel and vindictive act.
The people who brought the two lawsuits were from such states and were ideologically opposed to getting insurance under the ACA even though it meant going without health insurance. What happened was that for all of them, the cost of their insurance was above the 8% cut-off so they would have been exempt. But when the federal subsidies kicked in, the cost of their insurance dropped to so little that they no longer were exempt and had to purchase insurance or pay the penalty.
For example, one plaintiff David Klemencic had an annual income of roughly $20,000 per year. If the federal subsidies were not there, then he would have been exempt because the cost of insurance would have been above 8%. But because of the subsidies, the cost dropped to just $20 per year. So now he was no longer exempt and would have to purchase insurance for $20 or pay the penalty of 1% of his income, which comes to $200.
Since he is now at least $20 out of pocket because of the federal subsidies, whereas without the subsidies he would have not had to pay anything, this was sufficient to give him standing, even though his $20 would have provided him with insurance. All the plaintiffs in both cases have very similar stories, though the details vary.
So what we have are people who are poor and yet so ideologically opposed to the ACA that they are willing to forego the chance to get health insurance even if it would cost them next to nothing. If this is not the most perfect example of the old saw of cutting off one’s nose to spite one’s face, I don’t know what is.