IRS Decides Obamacare Is Too Small; Unilaterally Expands It

Yesterday, reported that a group of business owners and others in six states are suing the IRS to get it to restrict itself to the law of the land. You would think that trying to make the government enforce Obamacare would be bad news for conservatives. But that would only be the case if the IRS were not trying to do something worse than Obamacare.

“‘Agencies are bound by the laws enacted by Congress,’ said Sam Kazman, general counsel of the Competitive Enterprise Institute (CEI), which is coordinating the lawsuit. ‘Obamacare is already an incredibly massive program.  For the IRS to expand it even more, without congressional authorization and in a manner aimed at undercutting state choice, is flagrantly illegal.’”

As written, Obamacare is supposed to encourage states to set up voluntary exchanges. It does so by offering the residents of states that have set up exchanges refundable tax credits to subsidize the cost of their premiums (which would drive up the price of premiums even more—that that is a topic for another day).

The plan is not working. As of right now, thirty-three states have refused to set up such exchanges. According to the actual content of the misnamed Affordable Care Act, this means that the residents of those thirty three states cannot be granted tax refunds to help them buy premiums. In response, the Internal Revenue Service has disregarded the law, which mandates no subsidies for those in the states without health insurance exchanges, and is giving them the tax refund anyway.

“But the IRS rule says lower-income people living in those states will get federal subsidies to help them pay for their insurance premiums – even though the Affordable Care Act’s statutory language limits those subsidies to exchanges established by the states. The lawsuit says because of the IRS rule that illegally expands federal subsidies to all states, the plaintiffs ‘will be forced to either purchase or sponsor specific insurance that they otherwise would not purchase or sponsor, or expose themselves to financial penalties.’ Bottom line: The plaintiffs want nothing to do with Obamacare, and they say the availability of federal subsidies will force them into it – or penalize them for avoiding it.”

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The unauthorized action by the IRS will also mean that more people are required to submit to the individual mandate. So the agency is illegally causing financial harm to individuals by unilaterally changing the law in this way. Businesses will also be hurt.

“That’s because the Affordable Care Act fines certain businesses ($2,000 per employee) if their full-time workers use federal subsidies to purchase coverage on an exchange instead of getting it through the company. ‘Thus, the IRS Rule also has the effect of triggering the employer mandate payment for businesses in states that declined to establish their own Exchanges.’”

If the report is at all accurate, this action is more dangerous than even the Affordable Care Act itself. We have here an agency of the government acting as an independent legislature.

That can’t be healthy.

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