Lawsuits by Oklahoma Attorney General Scott Pruitt, others challenge Obamacare subsidies

Basic structure of health care exchanges, subsidies and penalties are under attack in lawsuits that are moving through courts in Oklahoma, Washington, D.C., Indiana and Virginia.
by Chris Casteel Modified: December 4, 2013 at 8:49 pm •  Published: December 5, 2013

— As President Barack Obama this week launched a new campaign to defend the Affordable Care Act, a federal judge here heard arguments in a lawsuit nearly identical to the one filed by Oklahoma Attorney General Scott Pruitt that would, if successful, deal a crippling blow to the law.

U.S. District Judge Paul L. Friedman promised to make a decision as soon as possible in the case, one of four that raises the same basic argument that Pruitt made first in his Oklahoma lawsuit.

That argument is that the Internal Revenue Service went far beyond the plain language of the Affordable Care Act to grant subsidies, based on income, to people who buy insurance on exchanges. Those subsidies can trigger penalties for employers and individuals.

One section of the law says that the subsidies, in the form of tax credits, are available to people who buy insurance “through an Exchange established by the State.”

However, 34 states, including Oklahoma, refused to establish their own exchanges, and the federal government has had to set up exchanges in those states to sell insurance policies. The IRS, in writing a rule to implement the law regarding subsidies, made no distinction between state-established exchanges and federal ones.

Pruitt and others have challenged that IRS rule, arguing that the law plainly says the subsidies are only available in exchanges established by states.

The issue at the core of the lawsuits also has been explored by congressional Republicans and was a frequent topic of discussion at a Judiciary Committee hearing Tuesday about the president's constitutional duty to execute laws.

Pruitt says law

would crumble

In a column this week in The Wall Street Journal, Pruitt wrote, “Should the courts decide the IRS is exceeding its authority and isn't allowed to assess the employer penalties in states that have not established their own exchanges, the structure of the ACA will crumble — as one of the primary mechanisms the federal government has employed to force people into the health-insurance market evaporates.”

A U.S. district judge in Muskogee has allowed most of Pruitt's case to move forward, rejecting the Obama administration's contention that Oklahoma couldn't legitimately sue over the issue.

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by Chris Casteel
Washington Bureau
Chris Casteel began working for The Oklahoman's Norman bureau in 1982 while a student at the University of Oklahoma. After covering the police beat, federal courts and the state Legislature in Oklahoma City, he moved to Washington in 1990, where...
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