A Republican federal judge has tossed out a lawsuit that claimed Obamacare subsidies can only go to residents of a state with its own insurance market. The decision is a setback for conservative critics of the Affordable Care Act, who have sought a number of legal remedies that would curtail or derail implementation of the law.
Four Virginia residents sued to render themselves ineligible to receive the Obamacare subsidy; this would allow them, under the financial-hardship exemption, to avoid the ACA's mandate to purchase health insurance. Thirty-four states have failed to set up ACA exchanges.
The lawsuit claimed that, as the ACA is currently worded, subsidies are paid to exchanges "established by the state." Therefore, if an exchange is not established by the state, subsidies can not be paid, the plaintiffs contended. The White House had stated this was not the intention of the law.
“While on the surface, Plaintiffs’ plain meaning interpretation… has a certain common sense appeal, the lack of any support in the legislative history of the ACA indicates that it is not a viable theory,” according to US District Court Judge James R. Spencer, an African American jurist and M.Div. appointed by Ronald Reagan. "It seems comprehensible that the omission of any mention of federally-facilitated Exchanges… could imply that Congress intended to preclude individuals in federally-facilitated Exchanges from receiving tax subsidies. … However, when statutory context is taken into account, Plaintiffs’ position is revealed as implausible."
Lawyers for the Competitive Enterprise Institute, a Libertarian think tank in Washington, are considering an appeal of the decision.
“Today’s ruling… is a setback to the states that chose not to participate in the Obamacare insurance exchange program, and to the small businesses, workers and individuals in those states as well,” said CEI lawyer Sam Kazman. “It also contradicts established law on how statutes are to be construed, and ends up allowing the Administration to substitute its version of Obamacare for the law that Congress enacted."
The Patient Protection and Affordable Care Act, which president Barack Obama signed into law in 2010 and went into effect on January 1st of this year, radically expands access to healthcare, but includes an individual mandate similar to the requirement to purchase car insurance. It is based on a 1989 proposal by the conservative Heritage Foundation, which has now changed its position. An identical scheme in Massachusetts was passed by governor Mitt Romney in 2006; Romney also flip-flopped on the mandate rule during his failed presidential run. The plan had a number of prominent Republican supporters, such as Orrin Hatch, Chuck Grassley, and Bob Bennett, before it was seized upon by the Obama administration.