Tuesday, December 03, 2013

Subsidies and Penalties for Obamacare only to Apply in States with State Run Exchanges?

From Oklahoma Attorney General Scott Pruitt in the Wall Street Journal:
While the president's health law is vast and extraordinarily complex, it is in one respect very simple. Subsidies are only to be made available, and tax penalties for not signing up for health insurance are only to be assessed, in states that create their own health-care exchange. The IRS, however, is attempting to enforce tax penalties in all states—including Oklahoma and the majority of the other states that have declined to create their own exchanges. Citizens and businesses in these states must use the federal exchange instead.

The distinction is critical, because under the terms of the law it is the availability of government insurance-premium subsidies that triggers the penalties against businesses if they fail to provide their employees with health insurance that the administration deems acceptable.
H/T Byron York

Update: Here's the Cato Institute's take on the issue.

H/T WSJ commenter Teresa Rich


MAX Redline said...

Good catch! Unsurprising that IRS would attempt to rewrite the law; EPA, after all, tries that all the time.

T. D. said...

Max, I follow Byron York's tweets. He catches a lot of interesting things (and makes me look good :-).

From what the Cato Institute paper says, standing to challenge seems like a key issue. Regulatory agencies get away with lots of unchallengeable rule and spending changes because merely being a taxpayer isn't enough to trigger standing because a taxpayer's interest is "minute and indeterminable". But, since giving away subsidies triggers the employer mandate with its clear penalties and individual loss of the "affordability exemption" from the individual mandate, employers and individuals should have standing to challenge these new rules. (pp. 188-194)

MAX Redline said...

Yep, EPA just lost a case this year because they asserted that the folks they were hassling lacked "standing", TD. The courts ruled otherwise; it involved a couple in (Wyoming?) who'd purchased land, had it examined by various inspectors who found it buildable, and began building their dream home. EPA stepped in and declared it a wetland, asserted that they had control, ordered them to tear out and remediate the "damage" and threatend fines of $37,000 a day if they failed to comply.

They had to take the EPA to federal court in order to win the right to appeal the EPA decisions.

T. D. said...

Yes, the regulatory federal structure is out of control. Congress should step in. Republic and Democratic presidents haven't. It's definitely last ditch to leave it up to the courts.