Article I, Section 8 of the U.S. Constitution ascribes to Congress the sole “Power To lay and collect Taxes, Duties, Imposts and Excises” on the American people. Somebody at the Internal Revenue Service didn’t get the memo.
Under the Patient Protection and Affordable Care Act (the deathcare trap we call Obamacare), legislation allows States to choose whether they want to set up State-run health insurance exchanges. Twenty-six States declined, prompting the Federal government to move to set up exchanges in their place.
Under the State exchanges, States are able to fine employers under the employer-mandate penalty. Those fines are then given back to employees in the form of subsidies to purchase healthcare insurance through the State-run exchange.
As the law was written, the employer-mandate penalty did not apply under Federal exchanges. But the IRS, at President Barack Obama’s direction, decided the penalty had to apply to Federal exchanges as well. Oklahoma Attorney General Scott Pruitt filed suit last year challenging the IRS on the rule change.
Essentially, Pruitt believes the employer mandate penalty does not apply under a Federal-run exchange, and the State’s policy decision not to set up an exchange should protect employers from the penalty. Pruitt is alleging that the IRS is violating the Administrative Procedures Act, which prevents an agency from exercising powers it doesn’t have. He claims the IRS has altered the effect of the law through regulation and implementation.
Last week, a Federal judge in Oklahoma ruled that the State had the legal standing to sue the Federal government over the employer mandate. The case will now make its way to the U.S. Supreme Court, where it should be struck down as unConstitutional.
But if SCOTUS just rules the IRS actions illegal, Obamacare will be left in a bigger pile of debris than it currently is. Without the penalties on employers, the exchanges will be bereft of money.
Hat tip: Benswann.com