court challenge

The court challenge that could drive a stake through the heart of Obamacare

Friday, December 27, 2013 by: J. D. Heyes
Tags: Obamacare, court challenge, federal subsidies

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(NaturalNews) Opponents of the federal government's takeover of the healthcare industry via the most freedom-robbing law passed in a century - Obamacare - have not been able to convince enough lawmakers or the president to repeal it through legislation.

In addition, opponents have also been unsuccessful at having the law tossed out as an unconstitutional infringement on Americans' freedom to engage in commerce (or not) by the U.S. Supreme Court.

So the nation is just stuck with Obamacare for the rest of eternity, right?

Not necessarily, say a couple of legal experts who now believe that they have a case to make alleging that the law was not properly passed in the first place, as reported recently by Newsweek:

Obamacare may have its problems, including more bugs than you can find in the cornfields of Nebraska, but its legal worries were meant to end after the Supreme Court upheld the individual mandate, the heart of the Affordable Care Act.

Now, as the technologists charged with making work report progress, lawyers are re-entering the fray. A little-heard of challenge currently making its way through the court system may represent opponents' last best hope of, as they are fond of saying, driving a stake through the heart of the law.

More than just a 'glitch'

Enter Jonathan H. Adler, a conservative law professor (itself a rarity) at Case Western Reserve University in Ohio. The year: 2011.

In reviewing the Obamacare law, Adler thought he might have spotted an error which could unravel a very large portion of it. Curious, he shot off an email to Michael Cannon, his friend and health policy expert at the libertarian Cato Institute in Washington, D.C.

The issue: federal subsidies for individuals buying insurance through state Obamacare exchanges.

The law says such subsidies should be allotted for plans purchased "through an Exchange established by the State under Section 1311," which references a section of the law that established the state-run exchanges.

That made Adler wonder if the law provides subsidies only for state-run exchanges and not federal ones.

The law "requires that the federal government step in to create an exchange when a state declines to do so," Newsweek reported. "But does it fail to give subsidies to the residents of those states?"

That may seem like just a small issue. But if that's the case, it's a disaster for Obamacare. Because without subsidies, healthcare coverage on the open market then becomes unaffordable for millions of Americans. And without a reasonably affordable option, the individual and employer mandates would necessarily go away.

"In other words," the news magazine reported, "the entire law could come crashing down on the 36 states that have opted not to run their own exchanges."

The IRS, once again, acting on its own authority

Since the law was passed in 2010, the Obama administration has been making subsidies - in the form of premium assistance tax credits - available in every exchange, no matter if states or the federal government was running them. In fact, the Internal Revenue Service - which implements that part of the law - made final a rule that allows subsidies in every state in 2012.

Adler and Cannon made their case in a Wall Street Journal op-ed in November 2011. They argued that the IRS was acting in plain violation of the language of the law. As such, Cannon says the pair decided to research the issue further; they have come to believe that the language in the law is no "glitch" but content that Congress intended to withhold subsidies from federal exchanges.

Newsweek explains:

Constitutionally, the federal government cannot order states to create the exchanges, so Adler and Cannon contend that Democratic lawmakers intentionally withheld premium assistance to strong arm states into implementing their own exchanges. Though this is not explicitly stated in the law, Cannon and Adler point to a handful of comments that they argue infer subsidies were intended for state-run exchanges - but there is no explicit evidence. Now that 36 states decided not to create their own exchange, Cannon and Adler maintain that the IRS is not carrying out the letter of the law.

"President Obama is trying to do the exact opposite of what the law says," Cannon said.

And now, they have taken their case to court - as have others. There are currently four cases challenging the subsidies in federally-operated exchanges.

Read the rest of the story here.


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