Obamacare Subsidy: The IRS Violated The Law And State Sovereignty

The IRS Violated The Law And State Sovereignty – Forbes.

What does the “Affordable” Care Act say regarding subsidies…

The Affordable Care Act explicitly says that subsidies are available only “through an Exchange established by the State.” Thirty-six states defaulted to the federally-created exchanges in 2014, making their residents ineligible for health insurance subsidies if the Supreme Court rules that the law means what it says.

One would think when it comes to the rule of law, that words mean things. Color me moderately skeptical.

The IRS ruled that applicants enrolling through a federal exchange (healthcare.gov) would also be eligible for subsidies. This act, combined with other aspects of the law appears becomes a states right issue.

In arguing that the subsidies are legal, the Obama administration “fails to consider the provision’s place within our constitutional structure,” the brief argues. The language of the statute is self-contradictory and ambiguous and “cannot justify the agency’s encroachment” upon State sovereignty. Regulation of health insurance has traditionally been a responsibility of the states, and the Affordable Care Act contained a number of provisions that reinforced that authority, including a choice of whether or not to establish an exchange. If they did, their citizens would receive subsidies, but their insurance markets would be subject to much greater federal control. The trade-off is that if they did not, citizens and businesses in the state would be protected from a number of the ACA’s mandates and financial penalties. (emphasis added – Ed)

“The IRS Rule eliminated the statutory choice by imposing those tax burdens in all States – even those that declined to establish their own Exchanges. The result is a more expansive exertion of federal regulatory control over health insurance than the statue authorized.”

The brief cites case previous law that says “if Congress intends to alter the ‘usual constitutional balance between the States and the Federal Government,’ it must make its intention to do so ‘unmistakably clear in the language of the statute.’” (emphasis added)

Congress did not do that, making a strong argument that the Supreme Court should decide that the IRS Rule is illegal.

Separately, the Galen Institute is working with colleagues on a policy recommendation for Congress to create a safety net for those who would lose their health insurance if SCOTUS agrees that the subsidies in federal exchanges are illegal. Stay tuned for details.

Unfortunately, you can still color me skeptical. However, Republican’s DO need to have a Plan B in case SCOTUS does rule in their favor.


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