Earlier this month the Supreme Court ruled that the Obama Administration could not force family businesses, like Hobby Lobby and Conestoga Wood Specialties, to violate their conscience in order to earn a living.

Another blow to Obamacare was delivered by the DC Circuit Court of Appeals today in a 2-1 decision, Halbig v. Burwell, affirming that the Administration has to follow their own law, as written and can’t either make it up or change it as they go along. The court ruled that federal subsidies to assist individuals in purchasing insurance are only available to those who purchase healthcare through an exchange created by their state, not a federally created exchange in a state. The Affordable Care Act text is extremely clear, only individuals who live in states that have set up their own healthcare exchange are eligible to receive income subsidies to assist in lowering the cost of purchasing healthcare.

The problem is many states did not set up their own exchange for a variety of reasons, including the cost of developing and running an exchange, and in some cases because they disagreed with the principle of Obamacare in general. Even some states that did originally decide to set up a state exchange, like Oregon, later dissolved it due to high cost and joined the federal healthcare.gov exchange. This year, 36 states decided to forgo developing and creating their own state exchange and instead opted to have the government create an exchange to operate in their state. Recent news reports also say that Massachusetts, if their exchange is not working properly in time for upcoming 2015 enrollment this fall, will plan on joining the federal exchange in their state.

The Affordable Care Act (ACA) allows for this possibility and says the federal government will create an exchange in the state if the state doesn’t. The issue is the ACA doesn’t say that money can go to the federally created exchange in those states. The Administration funded subsidies in these states anyway and thus the lawsuit with the option delivered today. Individuals in these 36 states who needed to purchase healthcare, if not provided by their employer, looked to the federally created exchanges to satisfy the individual mandate requirement. A recent study by HHS found that 87 percent of individuals who purchased healthcare on the federally created exchange were eligible to receive an income subsidy.

Now, this ruling could derail the entire Obamacare train.

  1. Plans on the healthcare exchanges were not as cheap as individuals originally thought they would be. Between high deductibles, high monthly premium costs, and lack of participating providers in certain designated areas, people did receive a sticker shock when they shopped on the marketplace last year. Now, if this ruling stands, individuals will not have the luxury of having the high cost of premiums masked by income subsidies if their state did not set up their own exchange.
  2. Assuming that no other states back out of operating their own exchange this upcoming plan year, individuals in 36 states will have to cover the entire cost of healthcare premiums on their own. This could result in thousands of individuals opting to pay the tax penalty rather than pay for the high cost of many of these exchange plans. If less people purchase healthcare, especially young people, there will be less healthy people in the pool, which could raise rates even more because healthcare insurance companies will have to compensate for the cost of covering pre-existing conditions.
  3. If there is one thing that Americans should realize about Obamacare by now, it’s that the executive branch does not have the power to write the law, enforce the law and interpret the law however it sees fit. The executive is in charge of faithfully executing the law. To date there have been 42 changes to Obamacare. Today’s ruling affirms that the President cannot change a law just because it is unpopular.

What does this ruling mean for average Americans? The ruling in Halbig v. Burwell affirms that the President cannot pick and choose what parts of the law he wants to follow. This ruling also illustrates to the American people that Obamacare really is as bad as Republicans said it would be. The Administration cannot mask high premiums, failed state exchanges, broken websites, and unenforced provisions with income subsides to those prohibited from receiving them according to the text of the Affordable Care Act.