Obamacare to Be Killed by Federal Judge?

Obamacare has thus far made me extremely happy. It is has been an unmitigated disaster. It has infuriated of millions of people. It will infuriate millions more. Obamacare has caused a great deal of individuals to have their current plans dropped even though Big Barry-O promised that everyone could “keep their health plans” if they liked them. Premiums for middle-class individuals have skyrocketed. The Obamacare website debacle has become the laughing stock of talk-show comedians and editorial pundits.  As far as I’m concerned, this is great. The public is seeing Obamacare for what it really is: a crappy piece of legislation that creates far more problems than it purports to solve.

However, there’s more to this sordid affair, much more. When Nancy Pelosi said that “the bill had to be passed before people could see what was in it”, it turns out that Congressional Democrats took that to heart. Apparently nobody did read the bill, because the Obamacare bill suffers from a grievous oversight: it does not authorize federal subsidies for insurance bought from the federal website. You can read the full story as reported by the Wall Street Journal here.

Here is a summary of what is happening: the text of the Affordable Care act does not explicitly or even implicitly authorize federal subsidies for insurance plans bought from the federal Obamacare website, the same website which is known in the news for being massively glitched and unworkable. The text of the bill only authorizes subsidies from insurance “through an Exchange established by the State under section 1311 of the Patient Protection and Affordable Care Act”.

One tenet of the Obamacare program is that middle-class families will receive federal subsidies on medical insurance. This is what is meant to keep the sting of the increased premiums down. A policy which normally may cost hundreds or even over a thousand per month is supposed to only cost a fraction of that after the subsidies are applied.

However, the Obamacare bill only authorizes these subsidies to be issued for insurance bought from the state website exchanges. The IRS had extended these subsidies to the federal website exchanges through regulation. However, groups opposed to Obamacare picked up on this practice. They filed a lawsuit through the federal courts of D.C to halt the flow of subsidies to the federal website. Much to the dismay and fervent opposition of the federal government, Judge Paul Friedman allowed the case to go forward. He has declared his intent to reach a decision by February of next year.

The big question to answer is this: Can the IRS spend federal funds (for the subsidies) without congressional approval? The Obamacare bill does not authorize these funds for the federal Obamacare website. Therefore, the federal subsidies are not congressionally approved. In theory, this means that federal subsidies for the federal website are not allowed and cannot be issued by the IRS.

So far, murky numbers seem to indicate that a few hundred thousand people have signed up for Obamacare so far. It is likely that at least a few hundred thousand more will sign up before February. If the Judge rules that the IRS is indeed not allowed to pay these subsidies to customers of the federal Obamacare website, then these customers will be stuck with wildly expensive insurance plans that they cannot afford. They will have to drop their plans. This may have negative impacts on their ability to get low-cost insurance in the future, as other insurance companies will see the premature cancellation as a sign of risk and necessitated increased premiums. In short: people who buy insurance through the federal website will be royally screwed.

I expect there will be much hand-wringing over this issue from supporters of Obamacare. They will argue that the oversight was clearly a mistake and that the federal website should be privy to federal subsidies, because Congress meant to include it in the bill but just forgot (or whatever. I’m not sure why they didn’t include this provision; it is well possible that they simply forgot). This may sound reasonable to some ears, but it absolutely is not. The implications of letting that slide are huge: If the IRS is allowed to spend unauthorized funds on what they think Congress intended in a bill’s language, then that opens the door for any government agency to begin spending unauthorized funds in the name of carrying out Congress’ supposed intended wishes. Make no mistake; if the precedent is set, other bureaucracies will start doing this.

The public has not heard about this yet. I have only stumbled across a few minor reports of this issue in the mainstream news. This will grow in importance. If Judge Friedman rules against the federal government in this case, it will be huge. It will instantly change everything. It will neutralize Obamacare as we know it. Republicans will never vote to modify the bill (I hope they wouldn’t, at least). This will increase the likelihood of it’s repeal. I sure hope it does, at least.

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