FLASHBACK--Obamacare Architect: No Subsidies in States That Don't Set Up Exchanges

By Susan Jones | January 5, 2015 | 11:28am EST
MIT economist Jonathan Gruber (AP Photo)

[Editor's Note: CNSNews.com first published this article on Jan. 5, 2015. Today, the Supreme Court ruled in King v. Burwell that the federal government could pay subsidies to people who did not buy their health insurance in an exchange set up by their state.]

(CNSNews.com) - In this new year, the U.S. Supreme Court will hear another challenge to the Affordable Care Act. And this time, Obamacare architect Jonathan Gruber's own words may help the people who are challenging a key provision of the law.

In petitioning the Supreme Court to take their case, the plaintiffs quoted Gruber, who said in 2012: "[I]f you're a state and you don’t set up an Exchange, that means your citizens don’t get their tax credits. … I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it.”

The problem arose when only 14 states took federal money to set up their own exchanges.

So the question before the Supreme Court is this: How can people in states with federally-run exchanges get tax-credit subsidies? The law says they can't; but the IRS, by regulation, said they can.

In their request for Supreme Court review, the petitioners noted that the Affordable Care Act authorizes federal tax credit subsidies for health insurance coverage that is purchased through an “Exchange established by the State."

“Congress did not expect the states to turn down federal funds and fail to create and run their own Exchanges,” the petition says. "Accordingly, for example, Congress did not appropriate any funds in the ACA for HHS to build Exchanges, even as it appropriated unlimited funds to help states establish theirs...Indeed, ACA proponents emphasized that '[a]ll the health insurance exchanges … are run by states,' to rebut charges that the Act was a federal 'takeover.'"

The petition continues: "Notwithstanding the ACA’s text and purpose, the IRS in 2011 proposed, and in 2012 promulgated, regulations requiring the Treasury to grant subsidies for coverage purchases through all Exchanges -- not only those established by states...but also those established by HHS."

Gruber's own words, therefore, appear to be central to the petitioners' case.

Repeating what he said in 2012: "[I]f you're a state and you don’t set up an Exchange, that means your citizens don’t get their tax credits. … I hope that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these Exchanges, and that they’ll do it.”

Under Obamacare, subsidies (or tax credits) are an essential part of "affordable" health insurance coverage. Without them, most people wouldn't be able to afford the health insurance they are now required by law to purchase (or else pay a fine).

On Dec. 30, the Department of Health and Human Services reported that 87 percent of people who selected 2015 plans through the federal exchange HealthCare.gov in first month of open enrollment were getting subsidies to lower their monthly premiums. That compares with the 80 percent of enrollees who purchased plans on the federal exchange in the same period last year.

According to SCOTUSblog, oral arguments in the case King V. Burwell are scheduled for Mar 4, 2015.

Also See:
Gruber's 2012 Comments on Subsidies May Help Gut Obamacare at Supreme Court

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