Are ObamaCare’s Insurance Subsidies Legal?

CascadeNewLogoBy Kathryn Hickok

Last Wednesday the U.S. Supreme Court heard oral arguments in a case challenging the implementation of the Affordable Care Act (ACA). Plaintiffs in King v. Burwell claim the Internal Revenue Service (IRS) does not have the authority to circumvent the actual text of the ACA. According to the law, federal insurance premium subsidies can be allotted only if plans are purchased “through an Exchange established by the State.” When 36 states chose not to create their own exchanges, the IRS essentially rewrote this portion of the law to give subsidies anyway.

Oregon did set up a state exchange―Cover Oregon. But Cover Oregon never worked as planned; and now Oregon is contracting with the federal exchange, The federal government and Oregon state officials claim this will guarantee Oregonians continued access to federal subsidies, but the King decision may not allow such subsidies to continue.

The King v. Burwell case could have a major impact on the future of ObamaCare. If the Court strikes down the IRS rule, the government would withhold subsidies for those living in states that chose to protect their citizens from the law’s employer mandate, the individual mandate, and the high costs of operating their own state-based exchanges. The Court’s decision could provide an important opportunity for states to reform health care in a meaningful way that respects taxpayers, provides for the truly needy, and addresses health care costs.

A ruling is expected by June 30.

Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market think tank.

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Posted by at 05:00 | Posted in Federal Government, Government Abuse, Government Overreach, Government Regulation, Health & Human Services, Health Care Reform, Obamacare, Oregon Government, State Government | Tagged , , , , , , , | 6 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    I am not as optimistic about this challenge to the ACA, particularly as regards Oregon. First, it is not difficult to imagine state’s simply adopting the federal health exchange as their own by tweaking its code, especially seeing how the federal government would likely be very cooperative in helping share and improve the technology of their exchange allowing states to claim their own separate version. Second, let’s say the ACA subsidies were denied by Court decision in this case. What might happen in Oregon as a consequence? The consequence is not likely good, in fact bad, viewed from a Libertarian perspective.

    Oregon politics are such that the federal exchange would be replaced by a state version of universal care. I guess Vermont tried and decided not to go to Universal Care most recently, but I don’t think this should stop Oregon’s public employee union thug regime from going to universal care.

    Oregon politics are pretty bad given all the multiple hundred million dollar public resource blowups over a few short years recently; and to see, the Oregon electorate double down on the same public employee union regime producing these large public resource meltdowns is pretty dumbfounding, and it is not hard to imagine Oregon ultimately going the Detroit like route. Heck, large swaths of rural Oregon already are in the Appalachian version of Detroit.

    • unsigned-in believer

      Score an up vote.

  • HBguy

    Ms. Hickock. It appears that you’re claiming that in states that have not set up their own exchanges employers and individuals are exempt from the required coverage and penalties.
    That is incorrect.
    The only thing states who have opted not to set up an exchange then who have challenged the subsidies have accomplished is to take the health insurance subsidies away from their poorest citizens. And, to make sure their taxes pay for subsidies for the poor in other states.
    Or, if the GOP could come up with an alternative that could provide more universal coverage at a more modest price. But they can’t. Because if they could, we’d see it by now.
    If this is Republican strategy, then the GOP need some new strategists or will be only visiting the whitehouse for some time to come.

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