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EDITORIAL: Obamacare’s fatal flaw

The state exchanges undermine the health care scheme

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For good reason the Internal Revenue Service is one of the most despised government agencies, and it's more unpopular than ever. A Fox News poll finds that 84 percent of those responding were concerned about the agency's abuse of power. It's only going to get worse.

Obamacare requires states to establish health care exchanges by Jan. 1, 2014. These bureaucratic creations are meant to offer highly regulated health plans carrying the administration's seal of approval. This is a central element of how Obamacare works: Individuals who obtain health insurance through a state exchange qualify for federal subsidies and tax credits. The availability of subsidies is the basis of the employer mandate.

The text of the health care law unambiguously says that a "state" must set up the exchange to enforce the tax credit and the mandate penalty. The federal government can create a federal exchange, but the plain language of the statute clearly says the mandate penalty and associated tax credits apply only to state exchanges. A new lawsuit argues that this puts the 33 states that chose not to establish state exchanges off the Obamacare hook.

To get around this difficulty, the IRS unilaterally declared Obamacare's tax provisions applicable to the federal exchange. The IRS decision sets out that subsidies shall be available to anyone "enrolled in one or more qualified health plans through an Exchange," and then defines "Exchange" to mean "a State Exchange, regional Exchange, subsidiary Exchange, and Federally-facilitated Exchange."

Michael Carvin, who argued the Supreme Court's Obamacare cases last year, is working with the Competitive Enterprise Institute to reverse the agency's decision. "The IRS rule we are challenging," says Mr. Carvin, "is at war with the act's plain language and completely rewrites the deal that Congress made with the states on running these insurance exchanges."

If the Obama administration thinks there's a problem in the law, it should ask Congress to fix it. The White House can't bring itself to admit the president botched his greatest legislative achievement, so the IRS was dispatched to do the work behind the scene. Given the revelations of IRS misbehavior over the past few months, the agency itself demonstrates that it can't be trusted. The courts should expedite this important case before the rogue agency undermines health care in the way it undermined the tax code.

The Washington Times

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