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Three Very Big Deals

Stanley Feld M.D.,FACP,MACE

Three very big deals occurred with to Obamacare the last few months that have received very little traditional media coverage. There has been sparse traditional media coverage of the significance of these three issues to the future of Obamacare.

It looks like the Obama administration is losing its ability to freeze, marginalize  and scandalize its opposition to gain public approval of President Obama’s agenda.

Obamacare and all of its lawless modifications are negatively affecting all the stakeholders who thought they would be better off with Obamacare.

This includes the indigent, middle class workers, the upper class and all the businesses involved in healthcare.

The three issues are: 

1. The D.C. appeals court overturns subsidies given by federal health insurance exchanges.

2. Obamacare application data is wrong for 2 million applicants receiving subsidies.

3. The Obama Administration adds major exemptions to the Obamacare individual mandate.

I will cover each issue in separate blogs. What is common to the three issues is that the Obama administration changes the law passed by congress at its whim  without the consent of congress.

The D.C. Appeals Court Overturns Subsidies From Federal Health Insurance Exchange.

A three judge panel of the powerful U.S. Court of Appeals in Washington D.C. ruled that subsidies may not be offered in the federal health insurance exchanges. The Department of Justice immediately announced it will challenge an appeals court ruling that strikes Obamacare subsidies for millions of americans using, the federal health insurance exchange.

The subsidies are critical to the success of Obamacare. Otherwise, Obamacare premiums are unaffordable to people making less than $50,000 per year. There is some debate as to whether the premiums are affordable to people making more than $50,000 per year. 

Obamacare was written to encourage states to set up health insurance exchanges. Many states refused to set up health insurance exchanges. The state governors and congress realized the economic and bureaucratic burden was going to be overwhelming even if the government covers 90% of the costs.

Additionally, states that opted out fear the federal government would have too much control over the states’ rights.

As soon as the Obama administration saw this coming in 2010 after the law was passed, it had the IRS issue a ruling that contradicted the law’s intent.

The IRS rule allows the federal health insurance exchanges to provide subsidies to people buying insurance through the federal health insurance exchanges.

The intent of the law passed bywas that only states could provide tax credits. I have not yet been able to figure out how tax credits can mean tax subsidies.

“ ACA Section 1401 provides that eligible taxpayers may receive income tax credits for the purchase of insurance “through an Exchange established by the State under Section 1311.”

"Section 1311 calls upon states to establish health insurance exchanges. It does not provide for the federal government to create health care exchanges."

"Rather, a separate provision of the act, Section 1321, provides that if a state does not “elect” to create an exchange that meets federal requirements, the federal government shall then “establish and operate” an exchange."

"Thus, under a plain reading of the text, the ACA only provides for tax credits for state-run exchanges, and if states fail to create exchanges, there are no tax credits for insurance bought on a federally run exchange.”

The IRS’s ruling provides that eligible taxpayers may receive tax credits for the purchase of qualifying health insurance plans established by states under Section 1311 or by the federal government under Section 1321. The only problem is that this is not consistent with the actual text of the statute passed by congress or the intent of the law.

"Section 1311 expressly requires that an authorized Exchange must be “established by a State.” Section 1304(d) also expressly defines “state” as “each of the 50 States and the District of Columbia.” Later amendments to the PPACA also provide that Exchanges created by territories are to be treated as the equivalent of state-run Exchanges, but there is no such language concerning federally run health insurance exchanges.

There are all sorts of legal arguments on both sides of the issue. It will be up to the Supreme Court to decide.

However, Jonathan Gruber, MIT economist and Obamacare architect has repeat over and over again that“states that set up their own health care exchanges would make their residents eligible for subsidies.’” 

Jon Gruber spent a couple of years barnstorming the country warning states that they had to set up their own exchanges, and that failure to do so would cut their residents out of the subsidy pool. This was the intent of Obamacare as stated by the architect of the law.

In a speech Jon Gruber gave in 2012, he delivered both a promise and a threat

"In the law, it says if the states don't provide them, the federal backstop will. The federal government has been sort of slow in putting out its backstop, I think partly because they want to sort of squeeze the states to do it.”

“ I think what's important to remember politically about this, is if you're a state and you don't set up an exchange, that means your citizens don't get their tax credits.”

“But your citizens still pay the taxes that support this bill. So you're essentially saying to your citizens, you're going to pay all the taxes to help all the other states in the country.”

“ I hope that's a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they'll do it.”

Government supplied subsidies are vital to the survival of Obamacare and its accompanying bureaucratic waste.

It should be pretty clear what the intent of the law is. President Obama has been  brazen in changing and enforcing laws to fit his agenda.

It is obvious he is trying to do the same in this case with the IRS ruling that many believe is illegally modifying the intention of the law without the consent of congress.

 The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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