Halbig: Obamacare Linchpin Threatened

The Supreme Court’s decision on Hobby Lobby sent liberals into a tailspin as Twitter lit up with political vitriol far beyond the pale. Loaded with crude language, several called to “burn Hobby Lobby to the ground.” [1]Meanwhile, Guardian columnist Jessica Valenti urged women to commit acts of public indecency inside Hobby Lobby stores, preferably in the glitter aisle. [2]

Along with violent and indecent rhetoric, there were quite a few hyperboles being cast to further gin up already high emotions, including one by the White House that claimed, “Today’s decision jeopardizes the health of women that are employed by these companies.” [3]

If the Left is clamoring over a ruling, which has little effect on Obamacare, it is hard to fathom what they will say – or do – if the DC Circuit Court of Appeals rules in favor of the plaintiffs in Halbig v. Sebelius. This case has serious implications on how subsidies function in states that refused to set up a state-based exchange, instead opting for the federal exchange.

“The central issue in Halbig, you’ll recall, is whether insurance plan tax subsidies established under 26 U.S.C. § 36B apply only to plans purchased on an exchange “established by the State,” as the statute says, or whether the subsidies also go to plans purchased on a federally-established exchange. The IRS issued a regulation taking the latter point of view, roughly doubling the number of states in which plans will receive subsidies.” [4]

What led to this newly created regulation by the IRS is the law’s failure to attract a majority of states to set up their own exchange. Despite the financial incentives of providing grants and tax subsidies, 34 states decided to forego a state-based exchange and the financial liability that goes with it. This created an unexpected dilemma for the Obama Administration, who was banking on states to willingly oblige.

Knowing that some type of assistance would be needed to get people to sign up for costly coverage on the federal exchange, the IRS conveniently interpreted the law’s original text – “enrolled in through an Exchange established by the State under 1311 of the Patient Protection and Affordable Care Act” – to include both state and federal exchanges. Not doing so would have caused greater turmoil for Obamacare.

“Everyone agrees that the ACA does not expressly authorize tax subsidies for plans purchased on federally-created Exchanges and that it does so expressly for plans purchased on State-created Exchanges… So the legal question before the D.C. Circuit Court of Appeals is about how far an agency can stretch a statute in search of authorization to provide a tax subsidy.” [5]

George Washington University Law Professor Jonathan Turley wrote how recent rulings could set an unfavorable precedent for those hoping the IRS’ shaky interpretation will survive.

“But the D.C. Circuit Court may see things quite differently, especially in light of recent Supreme Court opinions holding that the Obama administration has exceeded its authority and violated separation of powers.”

In Michigan vs. Bay Mills Indian Community, for example, Justice Elena Kagan noted that ‘this court does not revise legislation … just because the text as written creates an apparent anomaly as to some subject it does not address.’ In Utility Air Regulatory Group vs. EPA, Justice Antonin Scalia, writing for the majority, stressed that ‘an agency has no power to tailor legislation to bureaucratic policy goals by rewriting unambiguous statutory terms.’” [6]

With all eyes now focused on the DC Circuit, the Affordable Care Act and the Administration will undergo another crucial test. Will the court side with the law’s original intent or will they enable a bureaucracy drunk on power and lawlessness?