'State' means 'state'

Remember those much-discussed appeals court decisions last month about whether key Obamacare provisions apply throughout the country or only to the 14 states that have state exchanges, a restriction that would make Obamacare unworkable? Remember how journalists found what some called “a smoking gun”: a tape of Obamacare architect Jonathan Gruber saying only state exchanges qualified? But Gruber quickly backtracked, saying he had made an “off-the-cuff” mistake?

Well, a WORLD reader who pays attention to doings of the Department of Health and Human Services sent me a statement from a key Obama official that undercuts the oral misstep defense. The July 16 letter from Marilyn Tavenner, administrator of the HHS Centers for Medicare and Medicaid Services, to Puerto Rico insurance commissioner Angela Weyne, says a “careful review” by HHS of “the relevant statutory language” determined that key “Affordable Care Act requirements will not apply to individual or group health insurers in the U.S. territories.”

The letter lists crucial elements including community rating, single risk pool, and rate review. Tavenner said her agency “intends to issue regulations to affirm this interpretation and eliminate any text in the existing rules that is inconsistent with this interpretation (e.g. the definition of ‘state’ that includes territories …).” In other words, the HHS careful review affirms the plain reading of the law: “State” means “state.” Not territory. Not U.S. If the Supreme Court sees it this way as well, Obamacare is mostly dead.

I sent a copy of Tavenner’s letter to health law expert Betsy McCaughey, the former lieutenant governor of New York and author of two books on Obamacare. She responded: “In the Affordable Care Act, only an exchange established by a state can offer subsidies. But that proved inconvenient, so the IRS claims that state and federal exchanges can both offer subsidies. … [HHS has now] changed its definition of ‘state’ and excluded territories for the purpose of the consumer protections. What’s in a word? Whatever the Obama administration claims it means at any one time.”

Where does that administration go from here? It could purge Tavenner and anyone who contributed to the careful review. It could declare that “state” means “state and federal” but “federal” doesn’t include territories, thus making residents of Puerto Rico, Guam, and other territories second-class citizens. Or it could stop dodging.