Although they are getting far less media coverage than previous challenges to the Patient Protection and Affordable Care Act (Obamacare), there are some cases winding their way through the courts that could seriously undermine the manner in which Obamacare is being implemented.
The plaintiff in the case that is furthest along in the process, Halbig v. Sebelius, lost in the United States District Court for the District of Columbia (see opinion here). The case is being appealed to the United States Court of Appeals for the D.C. Circuit, with oral argument scheduled for March 25.
The argument in Halbig essentially argues that the scheme established by Obamacare relies heavily upon tax credits, subsidies and mandates upon individuals and businesses. The individual mandate, to recall, was declared to be a “tax” by the Supreme Court in its decision approving Obamacare.
Unfortunately for Obamacare’s proponents, the statute itself specifically mentions that taxpayers are only eligible for tax credits if enrolled in a qualified health plan through an exchange “established by the State under Section 1311.”
According to some experts, this means that those 34 states that did not implement a state exchange, and in turn became participants in the federal exchange, should not be eligible for any taxpayer subsidies. The IRS, however, has issued its own rules declaring that both state and federal exchange participants may receive subsidies under Obamacare.
If the Halbig plaintiff prevails and/or any of the plaintiffs in similar suits now pending prevail, that means that the IRS has authorized the taxing and spending of hundreds of billions of dollars without any congressional approval to do so, and such activities would no longer be permitted.
Furthermore, since the individual mandate, the employer mandate and certain “cost sharing” subsidies under Obamacare are triggered by the imposition of the tax credits, striking down the tax credits in the federal exchange states could also arguably strike down the individual and the employer mandate in those states.
That would effectively nullify key components of Obamacare in states with a federal exchange and force a major overhaul, since the government admitted in the first round of Obamacare lawsuits that the statute cannot function without the subsidies and the mandates.
Having already seen the Supreme Court engage in legal gymnastics to uphold Obamacare the first time around, I am not holding my breath that the plain meaning of the statute will be upheld, and the IRS rule subsequently struck down, but if the case finds its way to the Supreme Court, anything can happen.
Then again, Idaho has implemented a state exchange, so even if the IRS rule is struck down with regard to the other 34 states, the subsidies, the individual mandate and the employer mandate can likely continue unabated here in Idaho.
