Tag: health matrix

More Questions for Secretary Sebelius

By
Michael F. Cannon

Given the growing concern even among Democrats that ObamaCare will result in a “huge train wreck” later this year, I have a few questions for Health and Human Services Secretary Kathleen Sebelius to add to my previous list:

  1. What happens if a federal court (say, the Eastern District of Oklahoma) issues an injunction barring HHS from making “advance payments of tax credits” in the 33 states with federal Exchanges?
  2. Has HHS done any planning for that contingency? If so, what are those contingency plans?
  3. If HHS has not, why not? Given that the Congressional Research Service and Harvard Law Review both say there’s a credible case that the PPACA forbids tax credits in the 33 states with federal Exchanges, how could HHS not have a contingency plan ready?

For more on how HHS is violating federal law by planning to issue advance payments of tax credits through federal Exchanges, read my Cato white paper, “50 Vetoes: How States Can Stop the Obama Health Care Law,” and my Health Matrix article (with Jonathan Adler), “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”

Topics: 
Cato Publications, General, Government and Politics, Health Care

Issa: IRS Is Violating ObamaCare by Illegally Taxing Employers in 33 States

By
Michael F. Cannon

House Committee on Oversight and Government Reform chairman Darrell Issa (R-CA) writes in the Washington Examiner: 

To combat the sticker shock of Obamacare’s numerous requirements on health insurance premiums, the law creates expensive subsidies, which take the form of tax credits, for individuals who purchase a government-approved insurance plan. In order to avoid the appearance of a federal takeover of health care, the law ties the availability of these premium tax credits to an “Exchange established by the State.” Importantly, the way the law was written, if tax credits are not available within a state, then the expensive employer mandate tax does not apply to companies within that state.

With so many states refusing to play the role the law’s drafters envisioned, the Obama administration has embarked on a legally dubious effort to bypass the plain language of the law. Obama’s IRS has issued a rule that delivers the expensive subsidies through federally run exchanges as well. If it stands, this extralegal rule will undermine the decision-making role offered to states by Obamacare, and cause hundreds of billions of dollars of taxes and spending not authorized by the president’s health care law…

The language that limits tax credits to state-established exchanges should not now shock Obamacare’s supporters. Early in 2009, legal scholar Timothy Jost, one of Obamacare’s leading proponents, explicitly suggested linking the tax credits to state-established exchanges as a way to encourage states to set up the exchanges.

The Obama administration may be surprised and disappointed that many states have not found the refundable tax credit to be a sufficient incentive to set up their own exchanges, exposing their citizens to the other taxes and penalties associated with the law. But this does not justify the administration’s effort to ignore the plain language of the law that Obama championed and signed.

For more on this issue, see Jonathan Adler’s and my Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”

Topics: 
Government and Politics, Health Care

If Oklahoma Wins Lawsuit, ‘The Whole Structure’ of ObamaCare ‘Starts to Fall Apart’

By
Michael F. Cannon

Oklahoma Attorney General Scott Pruitt has filed a lawsuit challenging the Internal Revenue Service’s unlawful attempt to impose ObamaCare’s taxes on exempt employers and individuals. (Jonathan Adler and I plumb this issue in our forthcoming Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”)

An article in the current issue of Business Insurance cites a couple of experts on the potential impact of the lawsuit:

While the ramifications of the suit pending in the U.S. District Court in Muskogee, Okla., are huge, the challenge brought last month has gotten little attention…

What is clear is that the outcome of the lawsuit could be crucial for the future of the health care reform law, observers said.

If premium subsidies are not available in federally established exchanges, “No one would go to those exchanges. The whole structure created by the health care reform law starts to fall apart,” said Gretchen Young, senior vice president-health policy at the ERISA Industry Committee in Washington.

“The health care reform law would become a meaningless law,” added Chantel Sheaks, a principal with Buck Consultants L.L.C. in Washington.

For more, read here, here, here, here, here, here, here, and here.

Topics: 
General, Government and Politics, Health Care, Regulatory Studies