Obamacare could be ruled illegal in 36 states, federal judge allows lawsuit to move forward

Wednesday, October 30, 2013 by: J. D. Heyes
Tags: Obamacare, lawsuit, federal judge

(NaturalNews) Supporters of Obamacare, including the president himself, say that once the U.S. Supreme Court ruled that the law's individual mandate wasn't a mandate at all, but a tax, and therefore lawful under the Constitution, that was the end of it.

The Affordable Care Act indeed survived its legal challenge, despite Chief Justice John Robert's bit of creative writing to make the law "constitutional." But that doesn't mean it is a matter of settled law.

At least, that's the way one federal judge sees it. As reported by Britain's Daily Mail:

The Affordable Care Act forbids the federal government from enforcing the law in any state that opted out of setting up its own health care exchange, according to a group of small businesses whose lawsuit got a key hearing Monday in federal court.

The Obama administration, according to their lawsuit, has ignored that language in the law, enforcing all of its provisions even in states where the federal government is operating the insurance marketplaces on the error-plagued Healthcare.gov website.

Oops! Guess Obama and his minions didn't quite think of everything

Though a number of states went ahead and set up state-run insurance exchanges under the law, 36 did not. And as such, under the letter of Obamacare, the law's provisions don't apply there. At least, that's what the group of small businesses - and a federal court - are saying.

In particular, say the plaintiffs, Washington has no authority to pay subsidies and other pot-sweetening, taxpayer-supplied subsidies to convince Americans in those 36 states to buy health insurance. The plaintiffs go on to say that the Internal Revenue Service - Obamacare's chief enforcement agency - has overstepped its authority by going ahead and paying subsidies in those states anyway.

What's so important about the subsidies? Well, they serve as a trigger, determining who has to comply with the individual and employer mandates. Because of that, say plaintiffs, the Obama administration - not known for complying with laws it passes anyway - has been illegally enforcing the Affordable Care Act, suddenly subjecting millions of citizens and small employers to fines if they don't sign up for health insurance.

The law only authorizes subsidies for policies that are purchased "through an exchange established by the state."

And while a different section of the law allows the federal government to set up its own exchanges in states that have refused to do so, the language of the law seems plain: If the states themselves don't set them up, then there can be no payment of federal subsidies.

The IRS didn't see it that way - no surprise there - and wrote rules essentially negating the state exchange requirement.

Further, "government lawyers have argued that 'Congress made clear that an exchange established by the federal government stands in the shoes of the exchange that a state chooses not to establish,'" the Mail reported.

And, they contend in response to the lawsuit, the Treasury Department "has reasonably interpreted the Act to provide for eligibility for the premium tax credits for individuals in every state, regardless of which entity operates the exchange."

But that amounts to nothing more than the federal government ignoring the letter of the law, lawyer Sam Kazman told the paper.

"Without those subsidies," he says, "the employer mandate isn't triggered."

'The political aspect' could bring down the house

And that could eventually make the entire Obamacare system - which depends upon millions signing up - unsustainable.

Kazman is general counsel for the Competitive Enterprise Institute, a free-market think tank coordinating the case.

"The IRS cannot rewrite the law that Congress passed," Tom Miller, resident fellow at another think tank, the American Enterprise Institute, said. "Its regulation expressly flouts the statutory text of the Affordable Care Act, the intent of Congress and the reasoned choices of [36] states."

Kazman said that "the fiscal impact" of denying the system millions of dollars in lost fines, "while sizable, wouldn't be large enough to bring down the house. The political one, however, is."

He went on to say that "you'd have 34 'refusenik' states exempting their employers and many of their citizens from the employer mandate and portions of the individual mandate.

"You'd have companies in participating states considering whether to move their operations" to states where they don't have to obey the Affordable Care Act, he continued. "And you might even have some of those states seeking to undo their choice to participate."

Sources:

http://www.dailymail.co.uk

http://spectator.org

http://www.theatlanticwire.com

http://www.foxnews.com