- The Washington Times - Tuesday, February 18, 2014

Top Democrats who orchestrated the new health care law said they always intended for those in the health exchanges to be eligible for subsidies no matter whether they enrolled through a federal or state program — a key issue in an ongoing lawsuit over Obamacare.

House Minority Leader Nancy Pelosi, a California Democrat, and Senate Majority Leader Harry Reid, a Nevada Democrat, filed a brief with a federal appeals court arguing that they are credible voices to weigh in on four key words that will determine whether the government can pay subsidies to those who enroll in health plans in federally run exchanges.

A handful of businesses and individuals have sued arguing that when the law says subsidies can be paid to the exchanges, or health markets, that were “established by the state,” that excludes the 34 states that refused to set up their exchanges and left it to the federal government.

But the Democrats in Congress said that was never their intent.

“It makes no sense to think that Congress would have hidden this condition in the formula provision if it were trying to send a message to state legislators that the tax credit would not be available if their state failed to set up its own exchange,” they said in their brief, filed with the U.S. Circuit Court of Appeals for the District of Columbia.

Mr. Reid and Mrs. Pelosi were joined by Reps. Sander Levin, Michigan Democrat, and Henry Waxman and George Miller, both California Democrats, and a plethora of state lawmakers who support the health-care law. Former Sen. Max Baucus, Montana Democrat and key architect of the law, also signed onto the brief.

The IRS agreed with the lawmakers, ruling those in both federal and state exchanges are eligible for tax subsidies. The businesses and individuals sued, saying the IRS used rule making to unlawfully edit the law.

The plaintiffs lost at the trial court level, prompting an appeal. If the lawsuit proves successful, millions of Americans in nearly two dozen states could no longer collect taxpayer subsidies to help them buy insurance — a key element to making the new law work.

America’s Health Insurance Plans (AHIP), a trade group, said cutting off government subsidies to two-thirds of the states would disrupt the health overhaul’s fragile economics.

“It would leave consumers in those states with an unstable market and far higher costs,” AHIP’s attorneys said in a brief filed this week with the appeals court.

AHIP said tax credits make coverage more affordable and work alongside the law’s individual mandate, or “shared responsibility requirement,” which forces almost all Americans to gain insurance and broaden risk pools, now that sicker consumers with pre-existing medical conditions cannot be denied.

From a consumer’s perspective, it makes no difference if the exchange is run by the state or the federal government, AHIP said.

The administration has argued in court that the secretary of the Health and Human Services Department “stands in the shoes of” each state that decided not to run its exchange.

Employers who brought the lawsuit said that view is unfair, because Obamacare’s subsidies expose them to the law’s “employer mandate,” which in the coming years will force large employers to offer health coverage or pay fines. The mandate is triggered when at least one employee takes advantage of tax credits on the Obamacare exchanges.

Another one of the plaintiffs, a West Virginia man, said he qualified for a hardship exemption from the individual mandate because he didn’t make enough money to afford coverage under the law’s definitions. But the tax credit in his state bumped him into an affordable range, forcing him to acquire coverage he doesn’t want.

The appeals court is scheduled to hear arguments on the case March 25. On the same day, the Supreme Court will take up a high-profile challenge to the Obama administration’s “contraception mandate,” an outgrowth of the health care law requiring employers to insure birth control as part of their company health plans.

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