A seismic Obamacare ruling from the US Court of Appeals – D.C. Circuit provides lessons in three ways the dominant American political ideology, called Progressivism or Liberalism, makes government corrupt and dysfunctional, inflicting costs and burdens, both seen and unseen, upon The People.
- Using the income tax to weaken the Constitutional system of checks and balances by concentrating power in Washington.
- Delegating Congressional legislative authority to unelected bureaucrats through huge, “comprehensive” laws.
- Operating as unaccountable autocrats instead of as servants of the people in a representative government
The D.C. Court of Appeals ruled in Halbig Vs Burwell that a key Obamacare regulation, issued by the IRS, violates the letter of the law. The regulation empowers the IRS to issue subsidies in the form of tax credits to people who buy health insurance from healthcare.gov, the federal exchange. The court found that Obamacare or the Affordable Care Act (ACA) as written, authorizes those tax credit subsidies to be issued only to customers of exchanges that are built and operated by states.
The Halbig ruling is an earthquake. If sustained by the US Supreme Court, roughly two-thirds of Americans who live in the 36 states that did not set up exchanges will be ineligible for tax credit subsidies. The individual mandate, the requirement that every person have health insurance is enforceable only if insurance is “affordable,” as defined by the law. For most individuals Obamacare compliant insurance is not “affordable” without the tax credit subsidies. Therefore the individual mandate cannot be enforced in 36 states.
But that’s not all. Obamacare also imposes an employer mandate that is partially to blame for continuing high unemployment. Companies are required to provide very pricey Obamacare compliant insurance if they have fifty or more full time employees. The fine for not providing such insurance is $2,000 per year per employee. The event that triggers the fine is IRS approval of a tax credit subsidy to one or more of a company’s employees. But if employees are not eligible for a subsidy because their state didn’t set up an exchange there is no trigger and the employer can not be fined.
Thus, if the Halbig ruling survives its inevitable Supreme Court review, BOTH the individual and employer mandates will become unenforceable in 36 states.
Obamacare defenders immediately attacked the ruling. Typical was Vox.com’s Ezra Klein who declared the Halbig decision “plainly ridiculous,” adding that “the point of Obamacare is to subsidize insurance…” The New Republic pronounced it “absurd.” On MSNBC’s “Hard Ball with Chris Matthews,” Jonathan Gruber, MIT Professor, White House adviser and one of the principle architects of the ACA legislation bellowed:
Chris, it is unambiguous this is a typo. Literally every single person involved in the crafting of this law has said that it’s a typo, that they had no intention of excluding the federal states. And why would they?
Stay with us to find out why Professor Gruber was forced to eat his words a few days later.
Most of the media went along with the typo story, without bothering to read, comprehend or explain the Court’s reasoning. Once again Liberty Works will step in where the establishment media have failed. Here’s how the court reached it’s conclusion
The court identified three relevant sections in the massive, 2,500 page Affordable Care Act (ACA):
- ACA Section 1311 grants authority to the states to set up exchanges.
- ACA Section 1321 grants the federal Department of Health and Human Services (HHS) the authority to set up a federal exchange for states that do not set up their own.
- ACA section 1401 authorizes the IRS to grant health insurance subsidies called “Premium Assistance Coverage” in the form of tax credits to individuals of low to medium income. Under the heading “Premium Assistance Coverage Amount” section 1401 says:
The premium assistance amount determined under this subsection with respect to any coverage month is the amount equal to the lesser of (A) the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer’s spouse, or any dependent of the taxpayer and which were enrolled in through an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act …
Most of the media quoted only the words “established by the state,” and strived to plant the perception that it’s the only relevant phrase in the entire 2,500 page law, that it appears only once, and therefore, that it must be a typo. But that perception is wrong. The underlined text above establishes TWO requirements an exchange must meet for its customers to be eligible for tax credit subsidies:
- It must established by the State – not federal government and,
- Must be established under section 1311, which authorizes only state exchanges. Again, a separate section, 1321, authorizes the federal exchange.
The same two requirements appear again several paragraphs later under the definition of “coverage month:”
The term “coverage month” means…any month…the taxpayer, the taxpayer’s spouse, or any dependent of the taxpayer is covered by a qualified health plan described in subsection (b)(2)(A) that was enrolled in through an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act
Later on, the dual requirements are emphasized twice more in paragraphs that set forth ways to compute the tax credit.
Obviously, four deliberate repetitions of two requirements would rule out a “typo.” But, ACA supporters are hoping the Supreme Court will overrule Halbig based on a different concept, a “drafting error.” It must be an error they say. Why? Because they don’t like the outcome! More on the drafting error idea under number 3 below.
The President could respond to this setback by asking Congress to change the law. But he won’t do that because Senate Democrats don’t want to admit there is a problem and because House Republicans would insist on significant modifications to the law in exchange for their votes.
Now, the three ways Progressivism makes government corrupt and dysfunctional, inflicting costs and burdens, both seen and unseen, upon The People.
1. Using the income tax to weaken the Constitutional system of checks and balances by concentrating power in Washington.
Because concentrations of political power are always abused by the elite to the detriment of The People, the US Constitution brilliantly disperses governing authority among the states while limiting the federal government to a few, specified, or “enumerated” powers. Through the Constitution, the states created the federal government to be their servant. Congress may not require state legislatures to enact legislation or create programs. If there are to be social welfare programs such as Obamacare they must be created and operated by the states, not massive, one-size-fits-all federal behemoths.
But the schemes of the leftist progressive movement cannot be implemented without concentrating power in the central government. So progressives contrived a way around Constitutional checks and balances: Offering state governments financial incentives to comply with the central government programs. Said financial incentives were not possible before the federal income tax, which began in 1914, produced the required funds. Taxing income was not originally permitted by the Constitution and thus had to be authorized by the 13th amendment which was, of course, promoted by the progressive movement.
The financial incentives are sometimes convoluted but always a variation of the same idea: If a state enacts legislation the Washington elite orders, the federal government will provide “free money” to offset costs and even to fund unrelated programs.
Tax credit subsidies to customers who buy insurance from a state exchange are the free money in ObamaCare that was supposed to ensure that all states set up exchanges. In fact the authors of Obamacare were so sure this financial incentive would coerce every state into setting up an exchange, the law provides no funds to build a federal web site. Thus, the healthcare.gov project got a late start, contributing to its disastrous rollout, because funds had to be transferred from other programs.
Now: back to professor Gruber’s claim quoted above, that the state exchange requirement is a typo. A few days after the court issued its Halbig ruling, some enterprising reporters and bloggers turned up 2012 YouTube recordings of speeches by Professor Gruber. In those recordings here and here he states, unequivocally, that the intent of the law to deny tax credits to citizens of states that do not set up their own exchanges.
2. Delegating Congressional legislative authority to unelected bureaucrats
Obamacare is a massive law with hundreds of interrelated functions that are to be made operational by bureaucratic regulation. Complex government schemes never turn out as promised and always generate undesirable results, usually called “unintended consequences.”
When the bureaucrats realized that most of the states would not up exchanges, even though tax credits would be denied, they wrote a regulation that contradicts the plain language of the law, granting tax credits to customers of the federal exchange. But now that regulation has been challenged in court and lost.
So far, the regulators have piled up some 20 thousand pages of ObamaCare regulations, more than any doctor or patient or insurance executive could ever absorb and comprehend. Because the President postponed the start of the employer mandate until next year we don’t yet know how those regulations will turn out to be in conflict with the law or otherwise unworkable.
3. Operating as unaccountable autocrats instead of as servants of the people in a representative government.
With the typo idea discredited ACA supporters are shifting to a different tactic. When the case is heard by the Supreme Court they will attempt to persuade the justices to view the offending language as a “drafting error.” They will ask that the court disregard the text of the law and instead conjure “Congressional intent,” which they claim was to issue tax credits in the federal exchange.
But seeking to discern “Congressional intent” is like chasing the wind and tends to make one even more cynical about Congress. As courts have noted, Senators and Representatives who vote in favor of a bill have a wide range of intentions. A YES vote can mean that a representative:
- approves of a bill in its entirety, including in this case, restricting tax credits to customers in states that set up their own exchanges
- approves of only parts of a bill coupled with willingness to compromise and accept the other parts;
- intends his vote to please a lobbyist or pressure group;
- intends to exchange his vote for a promise from his party’s leadership, perhaps desirable committee assignments or campaign finance help;
- intends to exchange his vote for a subsidy or special consideration for a project or business interest back home. This is often a side deal, with the inducement tucked into a different, unrelated bill.
In the case of Obamacare/ACA there was yet another dynamic in play:
- intent to demonstrate loyalty to the President and the Democratic party by voting yes without reading the bill, based on utopian promises from the President. (If you like your insurance you can keep it, period. The typical family will save $2,500 a year)
The government’s Halbig lawyers were unable to show the court a single word in the Congressional Record to support their claim that “Congressional intent” contradicts the plain language of the law.
Obamacare was written largely by Senate staffers and outside consultants including Professor Gruber (mentioned above) who were overseen by just a handful Senators and Representatives. It became law only after extraordinarily intense arm-twisting and horse trading for votes. Special interest provisions were added hastily without due diligence. Only strenuous parliamentary maneuvering and rule bending avoided a Senate vote that would have killed the it. The law passed the House by only seven votes, 219-212 with all Republicans and 35 Democrats voting NO.
Thus, “Congressional intent” is so elusive that to even mention it is an insult to the court.
Only by inventing a most tortured argument could the Supreme Court overcome what is actually written in the law, four times, to approve tax credits for Healthcare.gov customers.