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Judge allows attack on Obamacare to continue

October 22, 2013|By Jon Healey
  • At Parkland Memorial Hospital in Dallas, financial counselors help Texans sign up for insurance under the Affordable Care Act. Texas is one of the states with a federally run insurance exchange, which some opponents of the law say should not be able to offer subsidized policies.
At Parkland Memorial Hospital in Dallas, financial counselors help Texans… (Ron Baselice / Associated…)

A federal judge on Tuesday denied the federal government's motion to dismiss a lawsuit challenging a key provision in the 2010 healthcare law, but the court didn't stop the provision from going into effect either.

At issue is whether health insurance subsidies for low- and moderate-income Americans will be available in 34 states where the federal government is operating the new marketplace (or "exchange") for individual policies. Four residents and three business owners from five of those states sued to stop the subsidies, arguing that the 2010 law makes them available only in states that set up their own exchanges. The Internal Revenue Service held otherwise last year, ruling that the law's subsidies will be available nationwide.

The Justice Department asked District Judge Paul Friedman in Washington, D.C., to throw out the lawsuit on procedural grounds, arguing (among other things) that the plaintiffs didn't have the legal right to bring the case. The plaintiffs countered with a request that Friedman grant a pretrial injunction against the subsidies.

Friedman denied both requests. That action allowed the case to proceed to the next stage, where the court will take up the heart of the dispute: whether the IRS was right in deciding that subsidies should be available in all 50 states. The judge also urged both sides to settle the case by mid-February, a month and a half after the subsidies are slated to start flowing to households earning less than four times the federal poverty level (which stands at $19,530 for a family of three).

The case is essentially one of statutory interpretation, boiling down to a dispute over how to read a single line in the famously lengthy law. So the plaintiffs' motives don't really matter here; the issue is whether the IRS exceeded its legal authority.

For the record, though, it's worth noting what the four individual plaintiffs were protesting. All four asserted that they did not want to obtain health insurance next year, at least not to the extent required by the healthcare law. But because the law's subsidies would make insurance affordable for them, they said, they wouldn't be exempted on hardship grounds from the mandate to carry insurance -- a requirement that one of the four had challenged directly in an earlier lawsuit, only to have the mandate upheld by the Supreme Court.

The three businesses, meanwhile, said that if subsidies are available, they'll face penalties if they don't offer their workers comprehensive health coverage. And they want to offer less coverage or none at all.

In other words, in addition to an attack on the employer mandate (which the administration has delayed until 2015), the case is a clever attempt to re-litigate the individual mandate. If the plaintiffs prevail, though, they wouldn't actually eliminate the requirement that adult Americans carry insurance. Instead, they would leave millions of lower-income Americans struggling to afford the coverage they have to buy -- and that they may need.

That's a lot of collateral damage. Of course, if you consider Obamacare a threat to individual freedom and the well-being of America as a whole, then any effort to undermine it is worth making. Even if it means that some of your neighbors stay uninsured.

By the way, The Times' editorial board weighed in on this issue Tuesday, arguing that the IRS' interpretation was proper but also calling on Congress "to clarify the law to remove any doubt about the premium subsidies."


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