Treasury Sec'y Ducks Question: What Will You Do If SCOTUS Guts Obamacare?

By Ali Meyer | February 4, 2015 | 8:48am EST

Treasury Secretary Jack Lew (AP Photo)

( - How is the Treasury Department preparing for the possibility that the U.S. Supreme Court may strike down Obamacare subsidies for people who buy health insurance on the federal exchanges?

Treasury Secretary Jack Lew repeatedly dodged that question on Tuesday, saying only that "we’re continuing to implement the it was written."

The Supreme Court will hear oral arguments in March on a simple question: Whether the Internal Revenue Service, by regulation, may extend tax-credit subsidies to people who buy their health insurance on exchanges established by the federal government, when the Affordable Care Act specifically states that subsidies apply only to insurance that is purchased through an "Exchange established by the State."

A ruling for the plaintiffs in King v. Burwell would gut the Democrats' health care law.

At a House Ways and Means Committee hearing on Tuesday, Rep. Kevin Brady (R-Texas) asked Treasury Secretary Lew, "Can you tell me if the Treasury Department or the IRS is doing anything to prepare for the possibility that the Court might rule against the IRS?”

“Congressman, let me start by saying that the Affordable Care Act is working and tax credits are working -- millions of Americans now have access to affordable healthcare coverage," Lew responded. “We believe that we have -- our lawyers have made the arguments, the Justice department has made arguments we think are compelling to the Court and we look forward to a positive ruling," he added.

Brady interrupted him: "I'm not asking for a prediction on the Court ruling but on the possibility that the Court will rule for the plaintiffs -- what planning is the Treasury Department or the IRS doing to deal with that type of ruling?”

“Congressman, there is no question that an adverse ruling would strip millions of Americans of health care coverage due to the loss of the tax credits," said Lew.

Brady interrupted: “So you would be, based on that, starting the work now to prepare for that ruling, correct?”

“Congressman, what I’m saying is that the premium tax credits are an essential part of the Affordable Care Act, that if they were removed, there would be serious disruptions in insurance markets in many states," Lew responded.

Brady tried again: "To ensure there’s not serious disruption, is the IRS or the Treasury planning now to deal with the ruling in the other direction?” he asked.

“What we’re doing is we’re continuing to implement the law, the law as it was written, which was to make sure that all American people had access to this,” Lew said.

"Let me ask you -- as Treasury Secretary, today, are you in effect guaranteeing that the Supreme Court will rule for the IRS in this case?” Brady asked.

“What I’m doing, and what we across the administration are doing, is implementing the law as it was written to provide health insurance to the American people,” Lew repeated.

“Sure, but are you -- I get the impression you’re very confident...are you guaranteeing that they (Supreme Court) are going to rule for the IRS and therefore you have to do no planning?” Brady asked.

“I leave it to the Justice Department to make our legal case in court, they have made I think a compelling case,” Lew responded.

“But you certainly would not guarantee that today,” Brady said.

“I’m sorry, I would not guarantee what?” Lew asked.

“Certainly not guarantee the Supreme Court ruling for the IRS,” Brady said.

“Well I would never presume to speak for the Supreme Court,” Lew stated.

“And I agree, because there is a possibility they may rule for the plaintiffs," Brady said. "I guess my question to you is that, should that occur, Republicans are already working to develop a thoughtful plan and a thorough plan to offer these millions of Americans choices to have affordable high-quality healthcare, we are doing that work ahead of time,” Brady said. “Is Treasury or the IRS doing the same type of work?”

“Congressman, this issue, as you know, this issue is currently before the Court. I can’t comment on the pending litigation. We’re confident of our interpretation..,” said Lew.

“Well I’m not asking -- I’m asking about planning (for) the possibility, as you admitted, you can’t guarantee the outcome, so the possibility it might rule otherwise, are you planning for that?” Brady asked once again.

“We are confident that our interpretation that Americans in every state are eligible for premium tax credits will stand and I’ve indicated--” said Lew.

“But a moment ago you admitted that you can’t guarantee the outcome. So let me ask you this," Brady interjected. "As Republicans work toward a thoughtful, thorough plan to address that ruling, will the White House work with us in that eventuality, or will you refuse to work with Republicans in dealing with that ruling and the millions of Americans that could be impacted?” Brady asked.

“Congressman, the oral argument hasn’t taken place, the ruling is months away -- I’ve indicated that if there were a ruling that took away the premium tax credit from a significant number of people, it would be very disruptive,” Lew said.

“Right, and in that case, will you work with Republicans in crafting a solution for those Americans so they can have high quality affordable health care? This is simple,” Brady said. “Will you work with us or refuse to work with us?”

“I think it’s a mistake to think there's a simple solution,” Lew said.

“I’m not suggesting that...Will you work with us or refuse to work with us?” Brady asked.

“I’m indicating our view that it would be a serious disruption; obviously, we’ll look at what proposals are made but I’m not going to prejudge what the Court does,” Lew said.

As previously reported, the House Energy Committee, in a Jan. 28 letter to the Department of Health and Human Services, told the agency to start preparing for the "possible consequences" of the Supreme Court's decision in King v. Burwell.

"As about 5 million individuals are estimated to have received subsidies through a federally established exchange, it appears that at least this many people could be impacted in some way by the Court's decision," said the letter signed by Committee Chairman Fred Upton (R-Mich.) and four other Republicans.

The Republicans specifically want to know what "contingency plans" HHS is developing in case the court strikes down the subsidies for insurance purchased on the federal exchanges. Thirty-seven states did not set up their own health insurance exchanges.

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