Supreme Court

Supreme Court ruling on ObamaCare subsidies harms taxpayers, hands victory to IRS

FILE -- June 25, 2015: Security guard in front of the Supreme Court in Washington. (AP Photo/Jacquelyn Martin)

FILE -- June 25, 2015: Security guard in front of the Supreme Court in Washington. (AP Photo/Jacquelyn Martin)

Thursday the Supreme Court handed a victory to the most hated agency of the federal government, the IRS.  The Justices voted 6-3 that the IRS can continue to offer subsidies to ObamaCare buyers in all fifty states, contrary to what Section 1401 of the Affordable Care Act says. 

The ruling puts a stamp of approval on IRS discretion to change provisions of the health law in order to make it work the way the administration wants.  It means more discretion for an agency that has targeted conservative groups, stonewalled Congressional investigators, “lost” thousands of official emails (and later, conveniently found them) and strikes fear in the hearts of Americans.

Changing the health law by fiat is nothing new.  The Obama administration has delayed, deleted, or distorted dozens of provisions. Remember the waivers for certain companies and unions, the employer mandate delays, the changed enrollment periods? The administration says they’re tweaks. 

Critics call it lawlessness.  The U.S. Constitution charges Congress with making the laws and the president with seeing that they are  “faithfully executed.” 

Now the fate of ObamaCare is up to the voters. Since May 1, nearly every poll shows that more than half the public opposes it.

Section 1401 of the Affordable Care Act states unambiguously that ObamaCare buyers will only get subsidies  “through an exchange established by the state.”   The subsidies were intended as a carrot to persuade states to establish exchanges.  Their residents would feel less of the sting of having to buy the pricey plans.  But surprise, only 14 states went along. The others, mostly led by Republican governors, refused. Late in the game, the administration had to establish the federal healthcare.gov exchange (remember, the one that kept breaking down?) to get ObamaCare launched in three-quarters of the states. 

Despite warnings from the Congressional Research Service that the text of the law did not permit it, the IRS handed out subsidies in those states too. 

Politically, it was a no brainer. The president had promised “affordable” care. But without the subsidies, the plans are hugely unaffordable.  Some 87 percent of ObamaCare buyers get subsidies, and pay only about one quarter of the true price, on average.  John Q. Taxpayer picks up the rest. (About $22 billion this year for subsidies handed out through healthcare.gov).

Defending the IRS for playing fast and loose with the law and your money, the administration’s lawyers told the Justices that the end justifies the means. It will take the nation closer to universal coverage.   Withdrawing the subsidies, they warned, would cause a “death spiral” in three quarters of the states, with healthy consumers dropping coverage and only the sick staying in the costly, unsubsidized plans. All possibly true. But contrary to the law Congress passed.

Even Jonathan Gruber, the notorious loud-mouth MIT economist credited with designing the Affordable Care Act, is on video explaining only twenty days after the law was passed that subsidies would only be available in states that set up exchanges. In states that don’t “your citizens don’t get their tax credits.” 

Too bad the Justices didn’t hear that. The administration’s lawyers lied, insisting no distinction was ever intended between state and federal exchanges. 

The decision notes that whether the ObamaCare subsidies “are available on Federal exchanges is thus a question of deep ‘economic and political significance.’” The majority called the law “ambiguous.” It is not. But clearly six of the justices had their eyes more on consequences than constitutionality. They said that eliminating the subsidies in most states would “likely create the very ‘death spirals’ that Congress designed the Act to avoid.”

On the other hand Justice Scalia’s dissent argues that “words no longer have meaning if an Exchange that is not established by a State is ‘established by the State.’”

The majority decision says “a fair reading of legislation demands a fair understanding of the legislative plan,” and that Congress passed ObamaCare “to improve health insurance markets, not to destroy them.”  

There’s a lesson to be taken. The 2,572-page Affordable Care Act was passed before lawmakers read it, rammed through the U.S. Senate on Christmas Eve, with then Senate Majority Leader Harry Reid threatening to keep members at the Capitol for Christmas if they didn’t support it.

The law’s size and obfuscating language endanger our freedom.  Politicians slip in exemptions for themselves, employers have to spend huge sums to have the law decoded.  And the IRS can claim the law says one thing when it says something different.  Who’s to know? 

Now the fate of ObamaCare is up to the voters. Since May 1, nearly every poll shows that more than half the public opposes it. Republicans running for president all pledge to repeal it and replace it with something better. If that happens, don’t let Congress pass another unreadable monster health law. 

We the people want a bill in plain, honest that our lawmakers can read before passing it and that Americans can actually decipher.  ​

Betsy McCaughey, Ph.D. is chairman of Reduce Infection Deaths and a senior fellow at the London Center for Policy Research. A former Lt. Governor of New York, she is author of "Beating Obamacare." For more visit www.BetsyMcCaughey.com.