Will the (lack of) state exchanges bring Obamacare down?

Christopher Bedford Former Editor in Chief, The Daily Caller News Foundation
Font Size:

Obamacare’s penalties for not buying insurance, as well as the subsidies that make its plans affordable in the first place, may not be legal in a majority of states, according to Oklahoma Attorney General Scott Pruitt.

Pruitt is suing the federal government on those grounds.

According to the letter of the law, the government can only reward subsidies and levy penalties in states that have created Obamacare state exchanges, but conservative resistance has stopped state exchanges from being set up in a number of states, including Oklahoma.

“While the president’s health law is vast and extraordinarily complex, it is in one respect very simple,” Pruitt wrote in a Sunday Wall Street Journal op-ed. “Subsidies are only to be made available, and tax penalties for not signing up for health insurance are only to be assessed, in states that create their own health-care exchange.”

The IRS, though, is still trying to levy penalties on citizens of those states. On Oct. 22, a U.S. district judge in Washington, D.C. declined to grant a preliminary injunction against the law, but agreed to hear the merits of the case in February. The Obama administration had attempted to derail the suit by arguing that it was too speculative.

“Only 16 states and the District of Columbia chose to set up the online marketplaces where people without private health insurance can shop for it, forcing the federal government to create them in the remaining states,” Reuters reported in October.

“What that means is that’s almost a trillion dollars of funding for Obamacare that cannot come to be,” D.C. attorney Joe diGenova told WMAL radio Monday morning. “Now, the administration has taken the position that, ‘Oh, I know that’s what the law says — that it has to be a state, but what it really means is the federal exchange too.’ Unfortunately, the law doesn’t say that. One judge has thrown out the lawsuit in Oklahoma; a D.C. judge has allowed the lawsuit to go forward; and motions for summary judgment are pending here in D.C.”

“This could be the single most important piece of litigation in all of this criticism of Obamacare, and it’s gone on almost completely unnoticed,” diGenova continued. “This is amazing.”

But why would the Democrats include this kill switch in the president’s most consequential legislation?

“Congress specified that credits and subsidies are only to be available in states that set up their own health-insurance exchange for a reason: It could not force states to set up exchanges,” Pruitt writes. “Instead, it had to entice them to do so. Oklahoma’s lawsuit is about preserving the state’s authority to make a policy decision granted to states under the Affordable Care Act. Our governor and policy makers in Oklahoma decided it wasn’t in the state’s best interest to create a health-care exchange.”

Follow Christopher on Twitter