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In Halbig v. Burwell, the D.C. Circuit Court of Appeals ruled that under Obamacare, the federal insurance subsidies are available for policies purchased only on state exchanges and not those purchased on the federal exchange.
This ruling bars the federal government from handing out taxpayer-funded subsidies to people who buy Obamacare plans in nearly two-thirds of the U.S. New Jersey and 35 other states refused to set up their own insurance exchanges.
Buyers in those states will have to pay the full price, which on average is up to four times the subsidized price they paid this year for Obamacare.
According to the Department of Health and Human Services, 87 percent of people who signed up for Obamacare in 2014 qualified for subsidies, and on average they paid only 24 percent of the true cost of their plan.
Quadrupling the price would trigger a mass exodus out of the plans, causing what the insurance industry calls a “death spiral.”
Betsy McCaughey, a healthcare expert writing for The New York Post, mentioned how the D.C. Superior Court is not impressed with the Obama Administration:
The D.C. Circuit Court ruling also chastised the Obama Administration for rewriting the law to suit its own ends. Judge Thomas Griffin, writing for the majority, declared “The Constitution assigns the legislative power to Congress, and to Congress alone.”
The judges made it clear; either Congress must act to change the law or states must establish their own exchange. Otherwise, Obamacare will collapse due to its cost-prohibitive premiums.
In 2012, the Congressional Research Service cautioned that the text of the law plainly indicated that the IRS’ authority to issue the tax credits is limited only to situations in which the taxpayer is enrolled in a state-established exchange.
Despite this and other warnings, IRS officials last fall dispensed tax subsidies in all 50 states.
Eventually, this is something the Supreme Court will likely have to decide. Twice in recent months the Supreme Court has emphatically declared that the executive branch must execute the laws, not rewrite them.
Tags: Halbig v. Burwell, Obamacare, state exchanges, subsides
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