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ObamaCare Clusterfuck: Will there be a Supreme Court challenge on Section 1311?

I tend not to quote the Motley Fool, but I haven't seen this argument elsewhere, so:

The Supreme Court's role in deciding the fate of the ACA probably isn't over despite last year's ruling. Multiple cases are winding their way through lower-level courts. One, in particular, stands out as a quite serious challenge for the ACA, in large part because it hinges on the initial Supreme Court determination that the individual mandate is a tax.

Section 1311 of the ACA states that a health insurance exchange must be "established by a State." Anyone who doesn't receive insurance from an employer must obtain insurance through an exchange or pay a penalty (i.e., a tax.) However, section 1401 of the ACA gives a tax credit for applicable taxpayers buying insurance through "an exchange established by the State under [section] 1311."

While section 1321 allows the federal government to create an exchange for states that choose not to do so on their own, the language of the ACA only allows tax credits to be given to people who buy insurance through an exchange established by their state. That's where the Supreme Court might have to step in yet again.

Article I, Section 8 of the U.S. Constitution requires that taxes "be uniform throughout the United States." If the ACA imposes a tax on citizens of all states but only provides a tax credit for those in states that setup their own exchanges, an argument could be made (and is being made) that the Uniformity Clause of the Constitution has been violated. Without the tax levies and credits, the individual mandate falls. Without the individual mandate, Obamacare implodes.

Interesting argument, which I don't know how to assess. Readers?

No votes yet


katiebird's picture
Submitted by katiebird on

It actually makes more sense (to me, at least) to use the promise of subsidies as a carrot to convince the varies states to create their own exchanges.

More sense than the bizarrely insensitive rule that Employers must offer coverage that is only affordable for employees .... and subsidies are therefore calculated by the affordability of individual policies rather than policies covering the whole family.

Constitutionally? I don't get the whole idea of legalized Extortion. Which is what I think has been set loose with this bill. It has become clear as the various regulations that my family will continue to spend over 25% of our income on health insurance. And I'm it totally sucks. But, at least it's just two of us now. I don't know how families make these choices.

Cruel, hopeless and depressing.

But probably constitutional to do whatever the F* they want to do.

beowulf's picture
Submitted by beowulf on

Lambert, they framed the problem rather oddly.

The IRS has already said that customers on federally-run exchanges will get the same tax credit as those in state-run exchanges so taxpayers in all 50 states would qualify-- excepting, of course, the poor in red states who won't get either Medicaid or Obamacare tax credits.

Tthe federal exchange = state exchange ruling seems to be a violation of what the law says but I don't think anyone has standing to challenge it. Taxpayers can challenge the constitutionality of a tax obligation (but only after the tax has been collected) but tax un-payers can't really challenge the constitutionality of a tax credit.

Submitted by lambert on

I defer to your expert knowledge:

Taxpayers can challenge the constitutionality of a tax obligation (but only after the tax has been collected) but tax un-payers can't really challenge the constitutionality of a tax credit.

I'm wondering however if there is language in the Court's decision upholding ACA that would give them standing. (I hate standing arguments....)

Submitted by Dromaius on

I should note that I am not in favor of people losing health insurance. However, I think a negative ruling on this law is a good thing because, as an anonymous commenter on a blog so rightly put it:

If they do remove the subsidies, and people realize how much Obamacare ACTUALLY costs to those, like me, in the middle class, who don’t receive subsidies, maybe there can be some honest discussion about this law’s catastrophic failings.