It’s amazing what the right motivation will do. After ObamaCare passed, the American territories worried that the mandates and insurer regulations would either force premiums to skyrocket or the markets to collapse. They lobbied for exemptions, but as late as last year HHS insisted that the law tied its hands. The statute bound all states to the law, and territories qualified as states:

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Furthermore, as HHS reminded one territorial governor at the time, they initially lobbied for inclusion in ObamaCare:

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Almost exactly a year later, HHS has changed its mind. After a “careful review” of the statute — which presumably didn’t happen when this letter went out last year — HHS has discovered that “State” really does just mean states after all, and not any other level of government (via Zero Hedge):

Last week’s burst of world disorder was ideal for a news dump, and the White House didn’t disappoint: On no legal basis, all 4.5 million residents of the five U.S. territories were quietly released from ObamaCare. Where does everybody else apply?

The original House and Senate bills that became the Affordable Care Act included funding for insurance exchanges in these territories, as President Obama promised when as a Senator he campaigned in Puerto Rico, the Virgin Islands and other 2008 Democratic primaries. But the $14.5 billion in subsidies for the territories were dumped in 2010 as ballast when Democrats needed to claim the law reduced the deficit.

As a consolation, Democrats opened several public-health programs to the territories and bestowed most of ObamaCare’s insurance regulations, which liberals euphemize as “consumer protections,” such as requiring insurers to accept all comers and charge the same premiums regardless of patient health. “After a careful review of the law,” said Health and Human Services in a 2012 letter, HHS granted the territories’ request to apply these rules “to the maximum extent permitted by law.” …

Laws are made by Congress, but all of a sudden last week HHS discovered new powers after “a careful review of this situation and the relevant statutory language.” For simplicity’s sake, the territories will now be governed by the “state” definition that excludes the territories for both the subsidies and now the mandates too. But the old definition will still apply for the public-health spending, so the territories will get their selective exemption after all.

What changed? In between last July and now, ObamaCare had a horrible rollout and terrible impact on insurance premiums here in the States. It went even more poorly in the territories, where prices skyrocketed in some cases — and in others, insurers simply pulled out. The markets there are smaller, and the health risks more pronounced, so community pricing and mandates to issue insurance either means everyone pays a lot more, or no one gets insurance at all. The latter is what resulted in the Marianas Islands.

However, HHS may be digging a deeper hole for itself in another sense. The Halbig case at the DC appellate court hinges on the definition of “state” in the statutory language. The sudden shift in HHS’ interpretation toward the literal sense of the word is in diametric opposition to its position in Halbig, which argues that “state” is more or less a generic term for government at any level. This position change comes too late to play into the Halbig decision expected any day now, but the Supreme Court may be very interested in this new interpretation if they decide to hear an appeal from whichever side loses.

Meanwhile, the rest of us are still stuck with ObamaCare, even though we’ll be seeing price spikes in insurance across the board in the next couple of months.