Obamacare | The Government's Takeover of Health Care

Obamacare Subsidies Challenged in Court

At the core of Obamacare is the individual mandate, forcing citizens to have health insurance or pay a government tax.  More importantly for Obamacare, though, are the trillions of dollars in tax subsidies used to fund the botched law.  As it turns out, these subsidies aren't very legal with how they were created and the IRS is the main culprit.  It has to do with the state exchanges and the federal exchange, where the IRS does not have the authority to restrict subsidies, based on the language in the bill

Here are the details from FOX News:

In the case, the plaintiff claims the Obama administration – in particular, the Internal Revenue Service -- is breaking the law by offering tax subsidies in all 50 states to offset the cost of health insurance. The suit maintains that the language in ObamaCare actually restricts subsidies to state-run exchanges -- of which there are only 14 -- and does not authorize them to be given in the 36 states that use the federally run system, commonly known as HealthCare.gov. 

A ruling against the subsidies would mark the biggest blow to ObamaCare to date, and would threaten the entire foundation of the newly devised health care system. A total of $1 trillion in subsidies is projected to be doled out over the next decade. 

"A legal victory for those challenging the subsidies would achieve a large part of what congressional Republicans have sought but have been unable to achieve legislatively – rolling back and unraveling ObamaCare,” Joe Carlson warned in the industry publication “Modern Healthcare,”

A U.S. District Court previously sided with the Obama administration on Jan. 15. The case is now before a three-judge panel of the U.S. Court of Appeals for the District of Columbia. 

Some have speculated that the tone of oral arguments suggests a looming ruling against the subsidies -- on the heels of the Hobby Lobby decision which limited the requirement on employers to provide contraceptive coverage. 

Here's why the subsidy issue matters: Subsidies are vital to the success of the ACA. Without them, health care on the individual marketplace could become too expensive for some residents in the 36 states who are in the federal exchange. And that could deprive the insurance companies of the flood of new customers they were depending on to keep prices relatively stable for everyone else. 

Justin Credible is a contributing editor for Habledash.

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