C. Steven Tucker –
A case about to be decided by the U.S. Court of Appeals for the D.C. Circuit could stop Obamacare dead in its tracks in 34 states. ‘Halbig v Burwell’ is based on an illegal action taken by the Internal Revenue Service in 2012. Below I will outline that illegal action and the two sections of the PPACA (Obamacare) that are relevant in this case.
State-based exchanges and federally facilitated exchanges
Section 1311 of the PPACA describes state-based health insurance exchanges. That section outlines the powers granted to the IRS to provide APTC – “Advance Premium Tax Credits” (a.k.a. ‘subsidies’) that will be used to artificially lower the high cost of health insurance offered in a state-based exchange. Tied to those APTC’s is also the power granted to the IRS to levy a $2,000 or $3,000 excise tax (non-tax deductible) on all employers with 50 or more full-time employees (first 30 employees waived) if they do not provide PPACA approved health insurance. This is a lot of new power granted to the IRS and this is the primary reason the IRS is hiring thousands of new agents.
Section 1321 of the PPACA describes federally-facilitated exchanges and state-federal partnership exchanges – like the exchange the state of Illinois has chosen to establish. In these types of exchanges, the IRS is granted no authority to provide APTC’s or to levy excise taxes on any employer in that state for not providing PPACA approved health insurance. Since the crafters of the PPACA assumed that every state would willingly establish a state-based exchange, there was no money appropriated for federally-facilitated exchanges.
Thus far 34 states have chosen not to open a state-based health insurance exchange. As such federally-facilitated exchanges have been implemented in those states regardless of the wishes of those state’s legislatures.