WASHINGTON — Oklahoma Attorney General Scott Pruitt told lawmakers here Wednesday that he's suing the United States over the health care law because the Internal Revenue Service ignored Congress' intent to let states opt out of key provisions.
At a House subcommittee hearing criticized by Democrats for politicizing an issue that's now before a federal judge, Pruitt said the IRS had effectively forced Oklahoma to comply with the requirements of state health insurance exchanges even though Oklahoma had decided not to create one.
“The regulation appears geared more toward enacting the agency's own policies than faithfully following the implementation of the law passed by Congress,” Pruitt said at the hearing, led by Rep. James Lankford, R-Oklahoma City.
Pruitt's suit, in federal court in Muskogee, contends that the health care law's system of subsidies and tax penalties only apply to state-created exchanges, which are online marketplaces where people can shop for health insurance.
Oklahoma and 33 other states have opted not to create their own exchanges, meaning that the federal government has to establish them. Pruitt's lawsuit, based on the work of a conservative law professor and libertarian researcher, contends that the law's plain text provides financial incentives and penalties only through state exchanges, not ones set up by the federal government.
The U.S. Justice Department is fighting Pruitt's lawsuit in court; the federal judge must first decide whether Oklahoma has the legal standing to sue over the rule.
Official defends IRS rule
At the outset of the hearing, Lankford said, “The leaders in my state decided to protect our employers and workers from the employer mandate tax penalties and protect future generations of Americans who will face increasing debt by not creating a state exchange.
“That was their option within the law, but now the IRS and Treasury's rule has invalidated my state's decision, harmed many employers and workers in my state and added to the federal deficit.”
Emily S. McMahon, a Treasury Department official who was involved in the IRS rule-making, said repeatedly on Wednesday that the department's interpretation essentially equating federal exchanges with state exchanges was “consistent with the statute as a whole.”
Lankford said there was no evidence the department carefully considered the question.
Simon Lazarus, a constitutional attorney, testified that the law's purpose was to provide nearly universal health care coverage. In context of the law and its goal, he said, the interpretation by Pruitt and others in regard to the exchanges was “highly implausible.”
Objection to hearing
Democrats on the subcommittee blasted the hearing as improper, considering Pruitt's ongoing case.
Rep. Jackie Speier, of California, the top Democrat on the subcommittee, told Lankford that he should steer the panel away from asking questions that could jeopardize a fair trial.
“Otherwise, I believe you may, intentionally or not, permit the legal process to be tainted by political interference,” Speier said.
Moreover, she said, “If Mr. Pruitt's lawsuit were to prevail, all he would achieve is making health care unaffordable to over 300,000 Oklahomans who would no longer be able to receive premium tax credits to help them buy health insurance in Oklahoma.”
A legal victory for Pruitt, she said, would be “a terrible loss for the lower-income people of Oklahoma who pay the attorney general's salary and whose taxes are even underwriting the very lawsuit that would deny them benefits.”