Just about everybody has chirped in on the legal ramifications of the Supreme Court's Obamacare decision. But the Cato Institute exposed some very interesting nuts and bolts relative to the legislation.
Threat to ObamaCare Is No ‘Drafting Error’
It turns out that ObamaCare makes an essential part of its regulatory scheme—an $800 billion bailout of private health insurance companies—conditional upon state governments creating the health insurance “exchanges” envisioned in the law.I had no earthly idea that Obamacare in fact authorized an $800 billion bailout of private health insurance companies. The fact that the bailout is contingent upon state voluntarily creating the Obamacare healthcare exchanges suddenly makes the issue a whole lot more interesting, especially in light of the fact that many states may refuse to implement the costly exchanges.
This was no “drafting error.” During congressional consideration of the bill, its lead author, Sen. Max Baucus (D-MT), acknowledged that he intentionally and purposefully made that bailout conditional on states implementing their own Exchanges.
Now that it appears that as many as 30 states will not create Exchanges, the law is in peril. When states refuse to establish an Exchange, they are blocking not only that bailout, but also the $2,000 per worker tax ObamaCare imposes on employers. If enough states refuse to establish an Exchange, they can effectively force Congress to repeal much or all of the law.
That might explain why the IRS is literally rewriting the statute. On May 24, the IRS finalized a regulation that says the law’s $800 billion insurance-industry bailout will not be conditional on states creating Exchanges. With the stroke of pen, the IRS (1) stripped states of the power Congress gave them to shield employers from that $2,000 per-worker tax, (2) imposed that illegal tax on employers whom Congress exempted, and (3) issued up to $800 billion of tax credits and direct subsidies to private health insurance companies—without any congressional authorization whatsoever.
Some supporters of the law claim that Congress never intended to give states the power to block ObamaCare’s insurance-industry bailout. No doubt there are many in Congress who held that position. But they lost. If they’re unhappy now, they should take it up with Max Baucus.
What they should not do is set a precedent where the IRS can, on its own discretion, tax one group and subsidize another to the tune of $800 billion.
Does this mean that Obamacare can be killed just by refusing to implement the exchanges? Of course, most blue states will eagerly implement the exchanges.
More importantly, what right does the IRS have to rewrite the law? The IRS isn't a legislative body but just an agency whose only purpose is to implement the law as written by Congress.
It appears that the IRS is implementing legislation that it illegally wrote.