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- States never considered subsidy issue in exchange decisions, report finds
- As President Barack Obama and others celebrate the Affordable Care Act's fifth birthday this week, strong new evidence has emerged undercutting one of the key arguments Obamacare foes are using in their U.S. Supreme Court case to disallow premium subsidies in states using the federal insurance exchange.
The law's challengers argue in King v. Burwell, which the high court is expected to decide in June, that Congress meant to use the subsidies as a powerful incentive to persuade states to set up their own exchanges, and thus wrote the law to allow those tax credits only in states that did so. Obama and the congressional Democrats who wrote the law say, however, that they always intended the subsidies to go to residents of all states.
Some legal scholars have said it would be unconstitutional for Congress to penalize the states for not setting up an exchange through such obscure language buried in a nearly 1,000-page law.
The Huffington Post examined thousands of e-mails, letters and news releases sent by state officials and HHS officials after the passage of the ACA and before the Internal Revenue Service issued its rule in August 2011 stating that the premium tax credits would be available in all states. The purpose of the investigation was to see if there was ever any discussion of whether states would forfeit subsidies for their residents if they did not establish their own exchange.
Here's what HuffPo found:
“Among all the emails, letters and press releases reviewed, there was not a single instance of an administration official warning that if states decided not to run their own health care exchanges, their citizens would not be eligible for the tax credit subsidies. Nor was there a single instance of a state official recognizing or anticipating such consequences. As states faced the choice of establishing their own exchange, creating a hybrid exchange with the federal government, or letting the federal government have full control, no one appeared to be discussing what plaintiffs now say is the most consequential financial element of the whole arrangement. Only when the issue began percolating on conservative news outlets, and had life breathed into it from conservative think tanks, did officials start to notice.”
Indeed, staffers for Oklahoma GOP Gov. Mary Fallin, who originally wanted to set up a state-run exchange, expressed consternation when they first heard in November 2011 that some Obamacare opponents were arguing that six words in the ACA disallowed subsidies in states using the federal exchange, according to the Huffington Post. When Oklahoma's Republican attorney general, Scott Pruitt, wrote to Fallin urging her not to set up a state exchange because he wanted to file a lawsuit over the subsidies issue (which he later did), Fallin's chief of staff described Pruitt's letter in an e-mail as “political and purely self-serving.” Nevertheless, three days later, the governor announced she was abandoning her effort to set up an exchange.
While everyone waits for the Supreme Court ruling in King, conservatives already are warning that even residents of states that did set up their own exchanges shouldn't feel secure about their premium subsidies. They are plotting legal moves to strike down subsidies in those states, on the grounds that the governors and health departments may have violated their state constitutions in establishing exchanges, according to the Daily Beast. The article predicts that there will be no end to the anti-Obamacare litigation in the foreseeable future, regardless of how the Supreme Court rules.