Michigan Attorney General Bill Schuette has joined a federal lawsuit in Washington, D.C., that, if successful, could cost Michigan consumers millions of dollars in health coverage tax credits.
It also could gut federal health overhauls, according to some. But it also would free Michigan businesses from a mandate to provide coverage to their employees, according to the brief filed by Schuette on Feb. 6 in support of a lawsuit known as Halbig v. Sebelius.
Schuette has been a vocal opponent of the 2010 Affordable Care Act. -- Navigating health care reform: A guide to the Affordable Care Act
"The Obama administration is wreaking havoc on citizens, job-providers and states by abusing executive authority to implement a poorly written law," his spokeswoman, Joy Yearout, said in a written statement. "Attorney General Schuette will fight at every turn to rein in this unrestrained expansion of federal authority."
At issue are tax credits that consumers have received or will receive when they purchase insurance on the Michigan Health Insurance Marketplace, or state exchange. According to federal data, 86% of Michiganders purchasing policies so far on the exchange have received credits to help them cover the costs.
It's a big selling point to those trying to encourage enrollment.
"Taking away the financial assistance? Bottom line -- that puts out of reach for a lot of people that quality affordable health care," said Erin Knott, director of Enroll Michigan, part of a national campaign.
In the Halbig case, the plaintiffs argue that tax credits are legally available only to consumers in states that established their own health insurance marketplaces under the 2010 Affordable Care Act.
Consumers can go to these online marketplaces to shop for insurance policies and apply for tax credits that -- depending on their income and family size -- could shrink their premiums and cost-sharing such as co-payments.
For example, a family of four with an income of up to about $94,200 or an individual with an income of up to $45,960 might be eligible for tax credits. The lower the income, the larger the tax credit.
But the law also bases the amount of the individual credits on the price of plans available "through an Exchange established by the State."
Michigan and 33 other states chose not to set up their own exchanges, deferring instead to the federal government. Consumers access the Michigan Health Insurance Marketplace, for example, through the federal website, www.healthcare.gov.
A federal court judge rejected the Halbig lawsuit last month, saying the intent of the law was to make tax credits available in all states. The plaintiffs -- several self-employed individuals and some businesses from a half-dozen states -- have appealed to the circuit court in Washington, where oral arguments are scheduled for March 25.
Nicholas Bagley, a University of Michigan law professor, has watched the developments of the Affordable Care Act and has blogged several times on the lawsuit. Complainants face an uphill battle, in part, because courts most often rule in favor of governments when there is ambiguity in the language of a law, he said.
For that reason, the complainants would have to go a legal step further, convincing the courts that the law isn't ambiguous -- rather, that it clearly prohibits consumers from getting tax credits if they purchase insurance on a federally operated exchange, such as the Michigan Health Insurance Marketplace.
The likelihood of winning that argument, he said, "is low."
Still, the lawsuit can't be ignored, either. If complainants are successful, the result would be devastating, essentially unraveling the Affordable Care Act, according to Bagley and others.
"It would increase the premiums drastically and put health care out of reach of millions," he said.
Based on federal numbers released last year, Bagley estimates it would cost Michigan consumers about $2.5 billion in tax credits if the suit is successful.
That's "outrageous and wrong," according to Mark Totten, a Kalamazoo attorney and Democratic candidate against Schuette. "The health care law clearly has problems, but we don't fix it by raising taxes on Michigan families," he said in a written statement to the Free Press.
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