A decision on the ACA tax credit:
An ACA court case that I described in a previous post has been decided.
My thoughts from the time this case was filed are presented below.
I have moved to Denver and am still unpacking. One of my first posts next week will be on the ramifications of this case.
More ACA litigation
This article on litigation brought by business groups attempting to overturn key aspects of the ACA is fascinating. This post provides a quick summary of the litigation and my comments.
: Plaintiffs in at least two court cases argue that tax credits for the purchase of health insurance in state exchanges are only available for insurance sold on health exchanges established by the state. According to this argument, tax credits are not allowed in states that refused to set up an exchange and left the task to the federal government.
Plaintiffs argue that the lack of a tax credit for the purchase of health insurance in certain states makes other key aspects of the ACA invalid or less applicable.
o Since penalties imposed on employers who fail to provide health insurance are only triggered if employees received tax credits the employer mandate does not exist in states that do not create an exchange.
o The individual mandate does not pertain to households if health insurance is unaffordable. A policy is deemed unaffordable if premiums exceed 8.0% of income. The lack of a tax credit would result in health insurance premiums exceeding the 8.0% threshold. These households are not required to purchase health insurance.
This situation arose because the Senate version of the ACA was enacted after the Democrats lost the Massachusetts Senate seat. The Plaintiffs argue that this interpretation accurately reflects the intent of the Senate bill, which became the basis for the ACA. The IRS has argued that Congress intended the tax credit to apply both to states that created their own exchange and states where exchanges were created by the Federal government. The plaintiffs argue the plain language of the law states otherwise.
: Very clever!!!
: If the plaintiffs win their case states would still be subject to rules banning pre-existing conditions and underwriting based on health status. However, a key subsidy for mitigating the costs associated these changes would not be available in states that did not establish an exchange.
: Is this the way laws are made in Washington? What is the gang of eight currently putting in the immigration bill? Would the Administration also capitulate on key language in order to achieve a comprehensive budget deal? I hope that the progressive Democrats in the Senate are willing to scuttle the immigration law and a budget deal or any future legislation unless there is clarity on key provisions.
There have been a number of instances where the IRS has had to interpret aspects of the ACA. (Instances include regulations governing eligibility for a tax credit when small employers offer health insurance and rules governing the value of benefits that a large firm must offer.) The IRS tends to argue that the plain language of the statute requires them to rule in a narrow way. In this case, the IRS rules they had authority to more broadly interpret the statute. I tend to find that previous IRS rulings lacked credibility and common sense.
: The business groups arguing this case want to deny the citizens of their state a valuable tax credit; thereby, increasing the cost of health insurance for individuals in their state. A ruling overturning tax credits and the employer mandate could actually benefit the Democrats politically. Opponents of the ACA that are bringing this court case need to be careful what they wish for!!!!
: The DC circuit court could play the key role in deciding this case. Last I heard there were four vacancies on this court. This is not payback for Bork. This is unprecedented. Senator Reid and President Obama need to take a stand on their judicial nominees. The time for compromise on this issue is long past. Senate rules need must be modified to allow up or down vote for judicial nominations after a certain point in time.
#Affordable Care Act