Obamacare subsidy lawsuit could prove problematic

The president’s signature healthcare legislation, which has been plagued by a series of debacles since ignoring the advice of experts, the administration rolled out a website that was not ready, could now face a possible death blow over lawsuit filed against the laws subsidies.


When the law was passed it provided for the federal government to issue subsidies to qualified individuals who purchase health care through a state run health care exchange. The law clearly specified the subsidy was only for these individuals.


The subsidy is a key element in partially fulfilling the president’s promise that healthcare would be cheaper under his healthcare plan. Thus far, many individuals who were fortunate enough to complete the enrollment process were shocked when they saw the new prices that in many instances were significantly higher than their old insurance plans. Supporters of Obamacare have argued this is unfair because the prices do not reflect the price after the subsidy is applied.


When the law was passed without a single Republican vote, in an attempt to dangle a carrot in front of reluctant legislators who were afraid the costs would go up, supporters inserted language issuing tax credits to people who enrolled through the exchanges established by states in an attempt to make it attractive for states to do much of the heavy lifting by forming their own exchanges.


However, despite the incentive 34 states opted not to set up their own exchange after the Supreme Court ruled they had that right. Based on the clear wording of the law, individuals do not qualify for subsidies in those states. By choosing to not receive subsidies, the states are also exempt from the mandatory insurance requirements as well as employer mandates that require employers with more than 50 employees to provide insurance.


However, just as Obama has done with so many other provisions of the law, he simply changed it on his own without getting congressional approval. The administration declared that individuals in the states would also qualify for the subsidies.


Following its decree, lawsuits were filed arguing that the law plainly specifies who qualifies for the tax credits and who does not. Moreover, by bequeathing the tax credits on states who chose not to set up their own exchange, they are now forcing businesses and individuals within that state to comply with the mandates requiring insurance.


US District Judge Paul L Friedman, said the seven plaintiffs have a legitimate case in charging that the administration is illegally paying healthcare subsidies to individuals attempting to sign up for coverage on the exchanges.


While the judge rejected a request for injunction while the case is being decided, he refused a request by the government to dismiss the case.


The administration’s argument is essentially that the only reason Congress put the language in the bill was because the idea of a majority of states opting out of setting up their own exchanges was inconceivable and it is not fair to prevent residents in those states from obtaining subsidies available to those in other states.

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