The Washington Times - July 26, 2013, 02:10PM

The House’s top investigator wants the Treasury to explain why states that opted for a federally run insurance market under President Obama’s health care law will be able to offer government subsidies to residents who enroll in search of health insurance.

House Oversight and Government Reform Committee Chairman Darrell Issa, California Republican, has scheduled a hearing on the issue before one of his panel’s subcommittees.


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For months, Mr. Issa has argued that a plain reading of the 2010 Affordable Care Act dictates that the subsidies are reserved for exchanges “established by the state.”

Mr. Issa and other critics of “Obamacare” say the administration did not count on more than half of the states defaulting to a federally-run exchange, where those without employer-based insurance will buy insurance with the help of government subsidies.

They say the Obama administration unfairly used rulemaking to expand the availability of subsidies to all exchanges.

In a letter to Treasury Secretary Jack Lew, Mr. Issa and Ways and Means Chairman Dave Camp, Michigan Republican, say they want more information about the legal basis for letting every exchange receive subsidies, “given the fact that IRS’s rules is contrary to the plain text of the law passed by Congress and signed by President Obama.”

Witnesses at the hearing slated for Wednesday include Emily McMahon, a deputy assistant Treasury secretary for tax policy, and Scott Pruitt, the attorney general of Oklahoma.

Mr. Pruitt has sued the administration over the issue. His case is pending, and a contingent of small business owners in states that deferred to a federal exchange also have sued.

The plaintiffs say that by extending the subsidies to their states, it exposes certain employers to the law’s “employer mandate.”

The mandate, which the Obama administration recently delayed by one year, to 2015, requires employers with 50 or more full-time workers to provide health coverage or pay fines. The fines kick in when at least one employee takes advantage of the subsidies, so plaintiffs in the lawsuits say the extension of subsidies to their states leaves them vulnerable to the sanctions.