The Competitive Enterprise Institute, a public policy group that advocates for free markets and limited government, said Thursday its attorneys have petitioned the Supreme Court to review an appeals court ruling last week that upheld an Internal Revenue Service regulation allowing premium tax credits for health insurance purchased on a federal exchange.
The ruling last week came only hours after another federal appeals court said the IRS lacked the authority under the Affordable Care Act to provide tax credits to subsidize health insurance purchased through a federal exchange such as HealthCare.gov, but only for coverage acquired on state-run exchanges (see Obamacare Suffers Blow as Court Bars Federal Exchange U.S. Aid and Employers Won’t Feel Immediate Sting from Federal Court ACA Subsidy Ruling).
On Thursday, CEI attorneys said they have requested the Supreme Court to review the ruling by the U.S. Court of Appeals for the Fourth Circuit in the case it brought there, King v. Burwell. The group had also coordinated and funded the other case, Halbig v. Burwell, in which the U.S. Court of Appeals for the D.C. Circuit struck down the IRS rules. The Justice Department is expected to appeal the Halbig decision but has not yet done so. Michael A. Carvin of Jones Day is the lead counsel for the plaintiffs in both cases, who consist of individuals and small business owners. The Competitive Enterprise Institute (CEI) is coordinating and funding both cases.
“From the time these cases were first filed, we’ve tried to get this issue resolved as quickly as possible for the plaintiffs and the millions of individuals like them,” said CEI general counsel Sam Kazman in a statement. “A fast resolution is also vitally important to the states that chose not to set up exchanges, to the employers in those states who face either major compliance costs or huge penalties, and to employees who face possible layoffs or reductions in their work hours as a result of this illegal IRS rule. Our petition today to the Supreme Court represents the next step in that process.”
The plaintiffs in the King case argued that the Affordable Care Act drew a distinction between state-established exchanges and those set up by the federal government in nonparticipating states. They contended Congress permitted subsidies only for states with their own exchanges, as a way of encouraging state participation. However, 36 states, mostly led by Republican governors, are not participating in setting up state-based exchanges and taxpayers must instead turn to the federal exchange for coverage.
“On Obamacare, last week started with a circuit split and ended with a Jonathan Gruber split. Our hope is the Supreme Court will at least resolve the former,” said Kazman.
Two days after the rulings, CEI said it brought to light a 2012 videotape in which Massachusetts Institute of Technology professor Jonathan Gruber, who helped craft the Affordable Care Act, said that nonparticipating states would not receive subsidies. CEI said this contradicts the current claim by the government that Congress never intended to withhold subsidies.
Proponents of the Affordable Care Act point to a record of legislative debate and hearings in which tax credits for the federal exchange were discussed and contend that the federal statute clearly supports the need for tax credits for insurance purchased on the federal exchange.
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