Fed appeals court panel says most Obamacare subsidies illegal


#1

From CNBC:

In a potentially crippling blow to Obamacare, a federal appeals court panel declared Tuesday that government subsidies worth billions of dollars that helped 4.7 million people buy insurance on HealthCare.gov are illegal.

A judicial panel in a 2-1 ruling said such subsidies can be granted only to those people who bought insurance in an Obamacare exchange run by an individual state or the District of Columbia — not on the federally run exchange HealthCare.gov.

“Section 36B plainly makes subsidies available in the Exchanges established by states,” wrote Senior Circuit Judge Raymond Randolph in his majority opinion, where he was joined by Judge Thomas Griffith. “We reach this conclusion, frankly, with reluctance. At least until states that wish to can set up their own Exchanges, our ruling will likely have significant consequences both for millions of individuals receiving tax credits through federal Exchanges and for health insurance markets more broadly.”

While I’m not thrilled for the people who may be impacted by this move, I’m very happy to see a court actually trying to hold the Executive Branch to do what the law says.

Enough rogue government.


#2

I figured that was the way they would rule, but wow. Praying for all of the people who will end up with the short end of that stick.


#3

Until the inevitable reversal by the ever-deferential Supreme Court, unfortunately.


#4

I do taxes on the side for friends of my kids who are waiters, kids in their late 20’s. They have no insurance and can’t really afford it. I’m really wondering what will happen to them next year on April 15 when the reality of this tax takes effed. I’m hoping there will be a big rebellion.

And the subsidies reduce the cost, but that doesn’t mean affordable.


#5

This would require SCOTUS to rule on what they think the law should be rather than what it is. Clearly, some of the justices will do that to advance their own agenda, but it conflicts with their duty under the constitution.

This was an entirely Democrat written bill and they showed how little competence they have in running other peoples’ lives. The ACA should be repealed in its entirety and a real national debate on how to provide healthcare should take place before a replacement is passed, even if it takes a whole election cycle or two.


#6

Exactly. Those subsidies were actually tax credits…that, depending upon his this plays out with the full court of appeals and SCOTUS, may suddenly no longer exist. That may mean some monster tax bills for people come next year.

One question for tax professionals here: say this issue is not finally until next year. Will the IRS either be required our be able to go back to 2014 in 2016 and beyond because of illegally applied tax credits done in 2014 (like this one)?


#7

I am going to agree with you on that. It seems like a lot of people were plainly misled.


#8

I can totally relate. I don’t have insurance either. Between premiums, deductibles and co-pays paying out of pocket is cheaper.


#9

There is a long line of precedent (including recent rulings) that says otherwise. But, you never know, who would have thought a penalty would be a tax either. :shrug:


#10

I don’t think this is going to happen. The clear language of the law says the subsidies are only available through State Exchanges. I suspect the USSC will rule that if the subsidies are to cover all states then congress should pass legislation saying so. There is ample precedent on the part of the USSC to back this up.


#11

Obama deliberately delayed the individual mandate to make sure reality didn’t set in until after the 2014 election.


#12

Will they able to-yes. Will they? I doubt it. In my 30 plus years as an Accountant I have never seen the IRS as politicized as it is now. They will do nothing that would hurt the Democrat party


#13

I agree.

“Government’s first duty is to protect the people, not run their lives.” - Ronald Reagan

Obama and the Democrat party obviously don’t agree with that quote.
I miss the days when the American government had a president who wasn’t trying to be a dictator.


#14

I did. It is entirely consistent with Helvering v Davis where the Supreme Court approved Social Security only as a tax. The Roosevelt administration never even argued in court that it was insurance, although it was sold to the public as insurance.

The Obama administration made both arguments to the Supreme Court, first that it was mandatory insurance, and secondly that it was a tax because they knew mandatory insurance was unconstitutional. Since one of candidate Obama’s biggest promises was not to raise taxes on the middle class, he still refers to the tax as a penalty and his followers let him get away with it.

The obvious solution for the President is to whip out his pen and issue an order not to enforce this law. He probably has a form letter already saved on his computer so he can just fill in the law not to be enforced, just like for DOMA, immigration, drugs, guns, elections, and tax law violations by certain Democrat politicians like Charles Rangel.


#15

Does kind of make you wonder at anyone who complained or will complain about things done by the political right. Watergate, the faulty intelligence of the Iraq War, the Valerie Plame affair - since the President can do whatever he wants, regardless of the law, why were and are people upset over these sort of things? I don’t get it.


#16

He recently announced that he is just going to ignore the ruling and continue providing subsidies regardless of the law.

On the other hand, the 4th Cir ruled shortly after DC and came to the opposite conclusion. :shrug:


#17

Yeah, you knew it would get an appeal once DC was in regardless.

And the 4th Circuit court essentially said “Come on, you can tell what was intended to have the IRS do…”

Assuming it hits the USSC,…

This SHOULD give C.J. Roberts the out he needs to save his judicial soul. The law as it is written, is obvious to anyone with a basic grasp of English. He has a perfect out to say he didn’t torpedo the legality of the law, but merely enforced it as written, which is what he claimed should be done.

As he said, it isn’t HIS job to fix our messes, or something to that effect. We’ll see now if he has any intergity or soul left however, or if he truly is a coward.


#18

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