by Mitch Kokai
Senior Political Analyst, John Locke Foundation
At its heart, though, Halbig is not just about ObamaCare. It is about determining whether the president, like an autocrat, can levy taxes on his own authority.
The president’s defenders often concede that he is doing the opposite of what federal law says. Yet he claims that he is merely implementing the law as Congress intended.
Such claims should be met with more than the usual skepticism when made by a president who openly advocates unilateral action—”I’ve got a pen, and I’ve got a phone”—when the legislative process doesn’t produce the result he wants, and when they are made by a president whose expansive view of his powers the Supreme Court has unanimously rejected 13 times. Unfortunately, the abuse of power exposed in Halbig may trump them all.
Here’s where the president broke bad. The Patient Protection and Affordable Care Act directs states to establish “exchanges” to regulate the sale of health insurance. If a state declines to do so, as 36 states have, the health-care law directs the federal government to “establish and operate such Exchange within the State.” But here’s the rub: Certain taxpayers can receive subsidized coverage, the law says, if they enroll “through an Exchange established by the State.” The law nowhere authorizes subsidies through exchanges established by the federal government.
This is common practice. The Medicaid program has operated on the same principle for nearly 50 years. Only residents of cooperating states get assistance. When Congress debated health reform in 2009, both Republicans and Democrats introduced legislation conditioning health-insurance subsidies on states establishing exchanges. Senate Democrats advanced two leading health-care bills. Both allowed federal exchanges to operate without subsidies. One of them became law.
The only thing that is uncommon about the Affordable Care Act is that two-thirds of the states refused to comply. Yet federal law is clear, consistent and unambiguous: The Obama administration has no authority to issue subsidies outside “an Exchange established by the State.” According to congressional investigators, Treasury Department and Internal Revenue Service personnel even admitted they knew the statute did not authorize them to dispense subsidies in states with exchanges established by the federal government. Yet the IRS still promulgated a rule authorizing subsidies in states with federal exchanges.